What changed in this filing

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Item 1. Financial Statements

2021-06-28 compared with 2021-04-07 · 160 added, 135 removed, 454 unchanged (39% of the section changed)

3 unchanged sentences

(in millions, except per share data)

Three Months Ended February 28/29,

Three Months Ended May 31, Six Months Ended

2021 2020 2021 2020

Passenger ticket $ 20 $ 446 $ 23 $ 3,680

Onboard and other 29 294 52 1,849

50 740 75 5,529

Operating Costs and Expenses

2 unchanged sentences

Payroll and related 241 705 460 1,315

Fuel 113 201 216 598

Food 17 108 28 385

Ship and other impairments 49 589 49 919

Other operating 224 471 404 1,142

681 2,484 1,216 6,007

Selling and administrative 417 492 879 1,170

1 unchanged sentence

Goodwill impairments — 1,364 — 2,096

1,665 4,918 3,214 10,420

Operating Income (Loss) ( 1,616 ) ( 4,177 ) ( 3,139 ) ( 4,891 )

11 unchanged sentences

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

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CARNIVAL CORPORATION & PLC

1 unchanged sentence

(in millions)

Three Months Ended February 28/29,

Three Months Ended May 31, Six Months Ended

2021 2020 2021 2020

Net Income (Loss) $ ( 2,072 ) $ ( 4,374 ) $ ( 4,045 ) $ ( 5,155 )

1 unchanged sentence

Change in foreign currency translation adjustment 104 23 303 48

Other 3 43 7 56

Other Comprehensive Income (Loss) 107 65 310 103

1 unchanged sentence

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

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CARNIVAL CORPORATION & PLC

42 unchanged sentences

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

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CARNIVAL CORPORATION & PLC

1 unchanged sentence

(in millions)

Three Months Ended February 28/29,

Six Months Ended

OPERATING ACTIVITIES

18 unchanged sentences

Purchases of property and equipment ( 2,157 ) ( 1,668 )

Proceeds from sales of ships 9 226

Proceeds from sales of ships and other 324 236

Purchase of minority interest ( 90 ) ( 81 )

Purchase of short-term investments ( 2,671 ) —

Proceeds from maturity of short-term investments 467 —

Derivative settlements and other, net ( 27 ) 257

14 unchanged sentences

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

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CARNIVAL CORPORATION & PLC

1 unchanged sentence

(in millions)

Three Months Ended

stock Ordinary

3 unchanged sentences

stock Total shareholders’ equity

At February 29, 2020 $ 7 $ 358 $ 8,829 $ 25,527 $ ( 2,028 ) $ ( 8,404 ) $ 24,290

Net income (loss) — — — ( 4,374 ) — — ( 4,374 )

Other comprehensive income (loss) — — — — 65 — 65

Issuance of common stock through

underwritten public offering (net of offering expenses and underwriters’ discount) 1 — 555 — — — 556

Equity component of Convertible Senior Notes — — 286 — — — 286

Purchases of treasury stock under the

Repurchase Program and other — 2 12 2 — — 16

At May 31, 2020 $ 7 $ 360 $ 9,683 $ 21,155 $ ( 1,962 ) $ ( 8,404 ) $ 20,840

At February 28, 2021 $ 11 $ 361 $ 14,977 $ 14,102 $ ( 1,233 ) $ ( 8,404 ) $ 19,813

Net income (loss) — — — ( 2,072 ) — — ( 2,072 )

Other comprehensive income (loss) — — — — 107 — 107

Other — — 28 — — — 28

At May 31, 2021 $ 11 $ 361 $ 15,005 $ 12,030 $ ( 1,126 ) $ ( 8,404 ) $ 17,876

Six Months Ended

stock Ordinary

shares Additional

capital Retained

earnings AOCI Treasury

shareholders’

At November 30, 2019 $ 7 $ 358 $ 8,807 $ 26,653 $ ( 2,066 ) $ ( 8,394 ) $ 25,365

3 unchanged sentences

— — — ( 342 ) — — ( 342 )

Issuance of common stock through underwritten public offering (net of offering expenses and underwriters’ discount) 1 — 555 — — — 556

Equity component of Convertible Senior Notes — — 286 — — — 286

Purchases of treasury stock under the Repurchase Program and other — 2 35 — — ( 10 ) 27

At February 29, 2020 $ 7 $ 359 $ 8,829 $ 25,527 $ ( 2,028 ) $ ( 8,404 ) $ 24,290

At May 31, 2020 $ 7 $ 360 $ 9,683 $ 21,155 $ ( 1,962 ) $ ( 8,404 ) $ 20,840

At November 30, 2020 $ 11 $ 361 $ 13,948 $ 16,075 $ ( 1,436 ) $ ( 8,404 ) $ 20,555

2 unchanged sentences

Issuance of common stock, net — — 996 — — — 997

— — 996 — — — 997

Other — — 60 — — — 60

At February 28, 2021 $ 11 $ 361 $ 14,977 $ 14,102 $ ( 1,233 ) $ ( 8,404 ) $ 19,813

At May 31, 2021 $ 11 $ 361 $ 15,005 $ 12,030 $ ( 1,126 ) $ ( 8,404 ) $ 17,876

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

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CARNIVAL CORPORATION & PLC

5 unchanged sentences

In the face of the global impact of COVID-19, we paused our guest cruise operations in mid-March 2020.

In September 2020 we began the resumption of limited guest cruise operations as part of our phased-in return to service.

As of February 28, 2021, none of our ships were operating with guests onboard.

Significant events affecting travel, including COVID-19 and our pause in guest cruise operations, have had and continue to have an impact on booking patterns.

The full extent of the impact will be determined by our gradual return to service and the length of time COVID-19 influences travel decisions.

As of May 31, 2021, five of our ships were operating with guests onboard.

Eight of our nine brands either have resumed or are announced to resume guest operations by November 30, 2021, as part of our phased return to service.

Significant events affecting travel, including COVID-19 and our phased resumption of guest cruise operations, have had and continue to have an impact on booking patterns.

The full extent of the impact will be determined by our phased return to service and the length of time COVID-19 influences travel decisions.

We believe that the ongoing effects of COVID-19 on our operations and global bookings have had, and will continue to have, a material negative impact on our financial results and liquidity.

1 unchanged sentence

The principal assumptions used to estimate our future liquidity requirements consist of:

• Expected continued gradual resumption of guest cruise operations

• Expected continued phased resumption of guest cruise operations

• Expected lower than comparable historica l occupancy levels during the resumption of guest cruise operations

• Expected incremental spend for the resumption of guest cruise operations, for bringing our ships out of pause status, returning crew members to our ships and implementing the enhanced health and safety protocols

• Expected incremental spend for the resumption of guest cruise operations, for bringing our ships out of pause status, returning crew members to our ships and implementing enhanced health and safety protocols

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

We are complying with the current various heightened governmental regulations required to return to guest cruise operations.

We are working with a number of world-leading public health, epidemiological and policy experts to support our ongoing efforts with enhanced health and safety protocols for the return of cruise vacations.

These advisors will continue to provide guidance based on the latest scientific evidence and best practices for protection and mitigation.

We also believe that there have been positive developments around the availability and widespread distribution of effective COVID-19 vaccines, which we believe will be important to achieving historical occupancy levels over time.

We cannot make assurances that our assumptions used to estimate our liquidity requirements may not change because we have never previously experienced a complete cessation of our guest cruise operations, and as a consequence, our ability to be predictive is uncertain.

2 unchanged sentences

We continue to expect a net loss on both a U.S.

GAAP and adjusted basis for the second quarter of 2021 and the full year ending November 30, 2021.

We have taken and continue to take actions to improve our liquidity, including completing various capital market transactions, capital expenditure and operating expense reductions, accelerating the removal of certain ships from our fleet and we will be pursuing refinancing opportunities to reduce interest expense and extend maturities.

Based on these actions and assumptions regarding the impact of COVID-19, and considering our $ 11.5 billion of cash and short-term investments at February 28, 2021, we have concluded that we have sufficient liquidity to satisfy our obligations for at least the next twelve months.

GAAP and adjusted basis for the third quarter of 2021 and the full year ending November 30, 2021.

We have taken actions to improve our liquidity, including completing various capital market transactions, capital expenditure and operating expense reductions, accelerating the removal of certain ships from our fleet and expect to continue to pursue refinancing opportunities to reduce interest expense and extend maturities.

Based on these actions and our assumptions regarding the impact of COVID-19, and considering our $ 9.3 billion of cash and short-term investments at May 31, 2021, we have concluded that we have sufficient liquidity to satisfy our obligations for at least the next twelve months.

Basis of Presentation

The Consolidated Statements of Income (Loss), the Consolidated Statements of Comprehensive Income (Loss), the Consolidated Statements of Cash Flows and the Consolidated Statements of Shareholders’ Equity for the three months ended February 28/29, 2021 and 2020, and the Consolidated Balance Sheet at February 28, 2021 are unaudited and, in the opinion of our management, contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement.

The Consolidated Statements of Income (Loss), the Consolidated Statements of Comprehensive Income (Loss) and the Consolidated Statements of Shareholders’ Equity for the three and six months ended May 31, 2021 and 2020, Consolidated Statements of Cash Flows for the six months ended May 31, 2021 and 2020, and the Consolidated Balance Sheet at May 31, 2021 are unaudited and, in the opinion of our management, contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement.

Our interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes included in the Carnival Corporation & plc 2020 joint Annual Report on Form 10-K (“Form 10-K”) filed with the U.S.

Securities and Exchange Commission on January 26, 2021.

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COVID-19 and the Use of Estimates and Risks and Uncertainty

1 unchanged sentence

GAAP”) requires management to make estimates and assumptions that affect the amounts reported and disclosed.

The full extent to which the effects of COVID-19 will directly or indirectly impact our business, operations, results of operations and financial condition, including our valuation of goodwill and trademarks, impairment of ships, collectability of trade and notes receivables as well as provisions for pending litigation, will depend on future developments that are highly uncertain.

developments that are highly uncertain.

We have made reasonable estimates and judgments of the impact of COVID-19 within our financial statements and there may be changes to those estimates in future periods.

Accounting Pronouncements

The FASB issued guidance, Debt - Debt with Conversion and Other Option s and Derivative and Hedging - Contracts in Entity's Own Equity , which simplifies the accounting for convertible instruments.

The Financial Accounting Standards Board issued guidance, Debt - Debt with Conversion and Other Option s and Derivative and Hedging - Contracts in Entity's Own Equity , which simplifies the accounting for convertible instruments.

This guidance eliminates certain models that require separate accounting for embedded conversion features, in certain cases.

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This portion of the fees, taxes and charges is expensed in commissions, transportation and other costs when the corresponding revenues are recognized.

For the three months ended February 28/29, fees, taxes, and charges included in commissions, transportation and other costs were not significant in 2021 and $ 174 million in 2020.

For the three and six months ended May 31, fees, taxes, and charges included in commissions, transportation and other costs were not significant in 2021 and were $ 41 million and $ 215 million in 2020.

The remaining portion of fees, taxes and charges are expensed in other operating expenses when the corresponding revenues are recognized.

5 unchanged sentences

These amounts include refundable deposits.

We are providing flexibility to guests with bookings

on sailings cancelled due to the pause in cruise operations by allowing guests to receive enhanced future cruise credits (“FCC”)

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or elect to receive refunds in cash.

We are providing flexibility to guests with bookings on sailings cancelled due to the pause in cruise operations by allowing guests to receive enhanced future cruise credits (“FCC”) or elect to receive refunds in cash.

We have paid and expect to continue to pay cash refunds of customer deposits with respect to a portion of these cancelled cruises.

1 unchanged sentence

We record a liability for FCCs to the extent we have received cash from guests with bookings on cancelled sailings.

Total customer deposits as of February 28, 2021 and November 30, 2020 were $ 2.2 billion , the majority of which are FCCs.

As of February 28, 2021, the current portion of customer deposits was $ 1.8 billion.

We had customer deposits of $ 2.5 billion as of May 31, 2021 and $ 2.2 billion as of November 30, 2020.

As of May 31, 2021, the current portion of customer deposits was $ 2.0 billion.

This amount includes deposits related to cancelled cruises prior to the election of a cash refund by guests.

Refunds payable to guests who have elected cash refunds are recorded in accounts payable.

Due to the uncertainty associated with the duration and extent of COVID-19, we are unable to estimate the amount of the February 28, 2021 customer deposits that will be recognized in earnings compared to amounts that will be refunded to customers or issued as a credit for future travel .

During the three months ended February 28/29, 2021 and 2020, we recognized revenues of an immaterial amount and $ 3.0 billion, respectively, related to our customer deposits as of November 30, 2020 and 2019.

Due to the uncertainty associated with the duration and extent of COVID-19, we are unable to estimate the amount of the May 31, 2021 customer deposits that will be recognized in earnings compared to amounts that will be refunded to customers or issued as a credit for future travel .

During the six months ended May 31, 2021 and 2020, we recognized revenues of an immaterial amount and $ 3.5 billion, respectively, related to our customer deposits as of November 30, 2020 and 2019.

Historically, our customer deposits balance changes due to the seasonal nature of cash collections, the recognition of revenue, refund of customer deposits and foreign currency translation.

5 unchanged sentences

Contract assets are amounts paid prior to the start of a voyage, which we record as an asset within prepaid expenses and other and which are subsequently recognized as commissions, transportation and other at the time of revenue recognition or at the time of voyage cancellation.

We have contract assets of an immaterial amount as of February 28, 2021 and November 30, 2020.

We have contract assets of an immaterial amount as of May 31, 2021 and November 30, 2020.

NOTE 3 – Debt

13 unchanged sentences

• Limit the amounts of our secured assets as well as secured and other indebtedness

As of February 28, 2021, we entered into supplemental agreements to waive compliance with the Interest Coverage Covenant and the Debt to Capital Covenant under our export credit facilities through August 31, 2022 or November 30, 2022, as applicable.

We entered into supplemental agreements to waive compliance with the Interest Coverage Covenant and the Debt to Capital Covenant under our export credit facilities through August 31, 2022 or November 30, 2022, as applicable.

We will be required to comply beginning with the next testing date of November 30, 2022 or February 28, 2023, as applicable.

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During the first quarter of 2021 we entered into supplemental agreements with respect to our $ 3.1 billion ($ 1.7 billion, € 1.0 billion and £ 150 million) multi-currency revolving credit facility (the “Revolving Credit Facility”) and many of our bank loans.

7 unchanged sentences

• Restrict the granting of guarantees and security interests for certain of our outstanding debt through November 30, 2024.

At February 28, 2021, we were in compliance with the applicable covenants under our debt agreements.

At May 31, 2021, we were in compliance with the applicable covenants under our debt agreements.

Generally, if an event of default under any debt agreement occurs, then, pursuant to cross default acceleration clauses, substantially all of our outstanding debt and derivative contract payables could become due, and all debt and derivative contracts could be terminated.

Any financial covenant amendment may lead to increased costs, increased interest rates, additional restrictive covenants and other available lender protections that would be applicable.

As of February 28, 2021, the scheduled maturities of our debt are as follows:

As of May 31, 2021, the scheduled maturities of our debt are as follows:

(in millions)

1 unchanged sentence

2021 3Q $ 259

3Q 2021 (a) 488

2024 (b) 4,548

2024 (a) 4,571

Thereafter 13,168

Total $ 31,475

(a) Includes $ 231 million of principal that was prepaid in March 2021.

(b) Includes the $ 3.1 billion Revolving Credit Facility.

(a) Includes the $ 3.1 billion Revolving Credit Facility.

The Revolving Credit Facility was fully drawn in 2020 for six month terms.

3 unchanged sentences

We are required to pay a commitment fee on any undrawn portion.

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NOTE 4 – Contingencies and Commitments

8 unchanged sentences

As previously disclosed, on May 2, 2019, two lawsuits were filed against Carnival Corporation in the U.S.

District Court for the Southern District of Florida under Title III of the Cuban Liberty and Democratic Solidarity Act, also known as the Helms-Burton Act, alleging that Carnival “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 January 21, 2021, the court continued the trial date in the Havana Docks matter to October 25, 2021.

On July 9, 2020, the court granted our motion for judgment on the pleadings in the Cuba matter filed by Javier Garcia Bengochea, and dismissed the plaintiff’s action with prejudice.

On August 6, 2020, Bengochea filed a notice of appeal.

On January 21, 2021, the court continued the trial date in the second Cuba matter to January 31, 2022.

We continue to believe we have a meritorious defense to these actions and we believe that any liability which may arise as a result of these actions will not have a material impact on our consolidated financial statements.

6 unchanged sentences

Certain of these agreements allow the credit card processors to request under certain circumstances that we provide a reserve fund in cash.

Although the agreements vary, these requirements may generally be satisfied either through a withheld percentage of customer payments or providing cash funds directly to the card processor.

As of February 28, 2021, we had $ 629 million in reserve funds relating to our customer deposits to satisfy these requirements which are included within other assets.

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, 2021 and November 30, 2020, we had $ 939 million and $ 423 million, respectively, in reserve funds relating to our customer deposits to satisfy these requirements which are included within other assets.

We expect a portion of new customer deposits to be withheld under these agreements.

Additionally, as of February 28, 2021, we placed $ 172 million of cash collateral in escrow, of which $ 142 million is included within prepaid expenses and other.

Additionally, as of May 31, 2021 and November 30, 2020 we had $ 166 million of cash collateral in escrow, of which $ 136 million is included within prepaid expenses and other.

We have and may continue to be impacted by breaches in data security and lapses in data privacy, which occur from time to time.

These can vary in scope and intent from inadvertent events to malicious motivated attacks.

We detected ransomware attacks in August 2020 and December 2020 which resulted in unauthorized access to our information technology systems.

We engaged a major cybersecurity firm to investigate these matters and notified law enforcement and applicable regulators of these incidents.

We engaged a major cybersecurity firm to investigate these matters and notified law enforcement and regulators of these incidents.

For the August 2020 event, the investigation phase is complete, as are the communication and reporting phases.

1 unchanged sentence

For the December 2020 event, the investigation and remediation phases are in process and regulators have been notified.

There is currently no indication of any misuse of information potentially accessed or acquired and we continue to work with regulators to bring these matters and other reportable incidents to conclusion.

We have incurred legal and other costs in connection with these and other cyber incidents, and while at this time we do not believe that these incidents will have a material adverse effect on our business, operations or financial results, no assurances can be given and we may be subject to future attacks or incidents that could have such a material adverse effect.

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We have been contacted by various regulatory agencies regarding these and other cyber incidents.

The New York Department of Financial Services (“NY DFS”) has notified us of their intent to commence proceedings seeking penalties if settlement cannot be reached in advance of litigation.

To date, we have not been able to reach an agreement with NY DFS.

In addition, State Attorneys General from a number of states are currently investigating a data security event announced in March 2020 and have indicated an intent to seek a negotiated settlement.

We continue to work with regulators regarding cyber incidents we have experienced.

We have incurred legal and other costs in connection with cyber incidents that have impacted us.

While at this time we do not believe that these incidents will have a material adverse effect on our business, operations or financial results, no assurances can be given about the future and we may be subject to future litigation, attacks or incidents that could have such a material adverse effect.

COVID-19 Actions

1 unchanged sentence

We have been named in a number of individual actions related to COVID-19.

Private parties have brought approximately 70 lawsuits as of April 1, 2021 in several U.S.

federal courts as well as in France, Italy and Brazil.

Private parties have brought approximately 72 lawsuits as of June 21, 2021 in several U.S.

federal and state courts as well as in France, Italy and Brazil.

These actions include tort claims based on a variety of theories, including negligence and failure to warn.

The plaintiffs in these actions allege a variety of injuries:

some plaintiffs allege only emotional distress, while others allege injuries arising from testing positive for COVID-19.

some plaintiffs confined their claim to emotional distress, while others allege injuries arising from testing positive for COVID-19.

A smaller number of actions include wrongful death claims.

All individual actions seek monetary and punitive damages but do not specify exact amounts.

Additionally, as of April 1, 2021, ten purported class actions have been brought by former guests from Ruby Princess , Diamond Princess , Grand Princess , Coral Princess, Costa Luminosa or Zaandam in several U.S.

Additionally, as of June 21, 2021, ten purported class actions have been brought by former guests from Ruby Princess , Diamond Princess , Grand Princess , Coral Princess, Costa Luminosa or Zaandam in several U.S.

federal courts and in the Federal Court of Australia.

These actions seek compensation based on a variety of tort claims, including, but not limited to, negligence, gross negligence and failure to warn, physical injuries and severe emotional distress associated with being exposed and/or contracting COVID-19 onboard.

As previously disclosed, on April 8, 2020, numerous former guests from Grand Princess filed a purported class action against Carnival Corporation and Carnival plc and two of our subsidiaries, Princess Cruise Lines, Ltd.

and Fairline Shipping International Corporation, Ltd.

(“Fairline Shipping”).

On May 5, 2020, this case was transferred to the U.S.

District Court for the Central District of California and on June 2, 2020, the plaintiffs removed Fairline Shipping from the case.

On October 20, 2020, the court denied the plaintiffs’ motion for class certification, and the plaintiffs filed a petition for leave to appeal this ruling to the U.S.

Court of Appeals for the Ninth Circuit on November 3, 2020.

On February 17, 2021, the Ninth Circuit Court of Appeals denied that petition.

As previously disclosed, on July 23, 2020, Susan Karpik, a former guest from Ruby Princess filed a purported class action against Carnival plc and Princess Cruises in the Federal Court of Australia.

On March 24, 2021 the plaintiffs filed a second amended complaint.

As previously disclosed, two purported class actions were filed on behalf of certain purchasers of Carnival Corporation securities alleging violations of Sections 10(b) and 20(a) of the U.S.

These actions include tort claims based on a variety of theories, including negligence, gross negligence and failure to warn, physical injuries and severe emotional distress associated with being exposed to and/or contracting COVID-19 onboard.

All COVID-19 actions seek monetary damages and most seek additional punitive damages in unspecified amounts.

As previously disclosed, a consolidated class action complaint with new lead plaintiffs, the New England Carpenters Pension and Guaranteed Annuity Fund and the Massachusetts Laborers' Pension and Annuity Fund, was filed in the U.S.

District Court for the Southern District of Florida on December 15, 2020 on behalf of all purchasers of Carnival Corporation common stock and/or Carnival plc American Depositary Shares, and sellers of put options and purchasers of call options on those securities, between September 16, 2019 and March 31, 2020, alleging violations of Sections 10(b) and 20(a) of the U.S.

Securities and Exchange Act of 1934.

Following the filing of a third purported class action on behalf of certain options investors, alleging the same set of factual theories, the three actions were consolidated with new lead plaintiffs, the New England Carpenters Pension and Guaranteed Annuity Fund and the Massachusetts Laborers’ Pension and Annuity Fund.

A consolidated class action complaint was filed on December 15, 2020 on behalf of all purchasers of Carnival Corporation common stock and/or Carnival plc American Depositary Shares, and sellers of put options and purchasers of call options on those securities, between September 16, 2019 and March 31, 2020.

The consolidated complaint alleges that defendants Carnival Corporation, Carnival plc, and Arnold W.

Donald violated Sections 10(b) and 20(a) of the U.S.

Securities and Exchange Act of 1934 by making misrepresentations and omissions related to Carnival Corporation’s COVID-19 knowledge and response.

Plaintiffs seek to recover unspecified damages and equitable relief for the alleged misstatements and omissions.

A motion to dismiss was filed on January 18, 2021 and was fully briefed as of March 8, 2021.

On May 28, 2021, the court dismissed the complaint without prejudice.

Plaintiff's current deadline to file a second amended complaint is July 2, 2021.

We continue to take proper actions to defend against the above claims.

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The investigations could result in the imposition of civil and criminal penalties in the future.

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Ship Commitments

As of February 28, 2021, we expect the timing of our new ship growth capital commitments to be as follows:

As of May 31, 2021, we expect the timing of our new ship growth capital commitments to be as follows:

(in millions)

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Financial Instruments that are not Measured at Fair Value on a Recurring Basis

February 28, 2021 November 30, 2020

May 31, 2021 November 30, 2020

Value Fair Value Carrying

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The fair values of our other debt were estimated based on current market interest rates being applied to this debt.

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Financial Instruments that are Measured at Fair Value on a Recurring Basis

February 28, 2021 November 30, 2020

May 31, 2021 November 30, 2020

(in millions) Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

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Valuation of Goodwill and Trademarks

As a result of the phased resumption of guest cruise operations and its effect on our expected future operating cash flows, we performed interim discounted cash flow analyses for certain reporting units with goodwill as of May 31, 2021, and determined there was no impairment.

For the three and six months ended May 31, 2020, we recognized goodwill impairment charges of $ 1.4 billion and $ 2.1 billion, respectively.

We also performed trademark impairment reviews and determined there was no impairment to our trademarks.

The determination of the fair value of our reporting units’ goodwill and trademarks includes numerous assumptions that are subject to various risks and uncertainties.

The effect of COVID-19 and the phased resumption have created some uncertainty in forecasting the operating results and future cash flows used in our impairment analyses.

We believe that we have made reasonable estimates and judgments.

A change in the conditions, circumstances or strategy (including decisions about the allocation of new ships amongst brands and the transfer of ships between brands), which influence determinations of fair value, may result in a need to recognize an additional impairment charge .

The principal assumptions, all of which are considered Level 3 inputs, used in our cash flow analyses consisted of:

• The timing of our return to service, changes in market conditions and port or other restrictions

• Forecasted revenues net of our most significant variable costs, which are travel agent commissions, costs of air and other transportation, and certain other costs that are directly associated with onboard and other revenues including credit and debit card fees

• The allocation of new ships and the timing of the transfer or sale of ships amongst brands, as well as the estimated proceeds from ship sales

• Weighted-average cost of capital of market participants, adjusted for the risk attributable to the geographic regions in which these cruise brands operate

Refer to Note 1 - “ General, COVID-19 and the Use of Estimates and Risks and Uncertainty ” for additional discussion.

(in millions) NAA

Segment Total

Segment (a) EA

Segment (b) Total

November 30, 2020 $ 579 $ 228 $ 807

Foreign currency translation adjustment — 11 11

February 28, 2021 $ 579 $ 235 $ 814

May 31, 2021 $ 579 $ 239 $ 818

(a) North America and Australia ( “ NAA”)

(b) Europe and Asia ( “ EA”)

(in millions) NAA

2 unchanged sentences

Foreign currency translation adjustment — 12 12

February 28, 2021 $ 927 $ 261 $ 1,188

The determination of the fair value of our reporting units’ and trademarks includes numerous assumptions that are subject to various risks and uncertainties.

The effect of COVID-19, the pause in guest cruise operations and the possibility of further extensions have created some uncertainty in forecasting the operating results and future cash flows used in our impairment analyses.

For the three months ended February 29, 2020, we recognized goodwill impairment charges of $ 731 million.

We believe that we have made reasonable estimates and judgments.

A change in the principal assumptions, which influences the determination of fair value, may result in a need to recognize an additional impairment charge.

The principal assumptions, all of which are considered Level 3 inputs, used in our cash flow analyses for the three months ended February 29, 2020 consisted of:

• The timing of our return to service, changes in market conditions and port or other restrictions

• The allocation of new ships and the timing of the transfer or sale of ships amongst brands, as well as the estimated proceeds from ship sales

• Weighted-average cost of capital of market participants, adjusted for the risk attributable to the geographic regions in which these cruise brands operate

Refer to Note 1 - “ General, COVID-19 and the Use of Estimates and Risks and Uncertainty ” for additional discussion.

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Impairments of Ships

May 31, 2021 $ 927 $ 265 $ 1,192

Impairment of Ships

We review our long-lived assets for impairment whenever events or circumstances indicate potential impairment.

In 2020, as a result of the effect of COVID-19 on our expected future operating cash flows and our decisions to dispose of certain ships, we determined certain impairment triggers had occurred.

Accordingly, we performed undiscounted cash flow analyses on certain ships in our fleet throughout 2020.

Based on these undiscounted cash flow analyses, we determined that certain ships, specifically those being disposed of, had net carrying values that exceeded their estimated undiscounted future cash flows.

We determined the fair values of these ships based on their estimated selling value.

As a result of the effect of COVID-19 on our business, we determined that one ship, which we expect to dispose of, had a net carrying value that exceeded its estimated undiscounted future cash flows as of May 31, 2021.

We determined the fair value of this ship based on its estimated selling value.

We believe that we have made reasonable estimates and judgments.

4 unchanged sentences

• Timing of the sale of ships and estimated proceeds

For the three months ended February 29, 2020, we recognized $ 172 million and $ 158 million of ship impairment charges in the North America & Australia ( “ NAA ” ) and Europe & Asia ( “ EA ” ) segments, respectively, included in other operating expenses of our Consolidated Statements of Income (Loss).

We recognized a ship impairment charge of $ 49 million in our EA segment for both the three and six months ended May 31, 2021 .

For the three months ended May 31, 2020, we recognized $ 348 million and $ 150 million of ship impairment charges in our NAA and EA segments respectively, and $ 520 million and $ 308 million of ship impairment charges in our NAA and EA segments, respectively for the six months ended May 31, 2020.

These impairments are included in other operating expenses of our Consolidated Statements of Income (Loss).

Refer to Note 1 - “ General, COVID-19 and the Use of Estimates and Risks and Uncertainty ” for additional discussion.

Derivative Instruments and Hedging Activities

(in millions) Balance Sheet Location February 28, 2021 November 30, 2020

(in millions) Balance Sheet Location May 31, 2021 November 30, 2020

Derivative liabilities

4 unchanged sentences

(a) We have interest rate swaps designated as cash flow hedges whereby we receive floating interest rate payments in exchange for making fixed interest rate payments.

These interest rate swap agreements effectively changed $ 237 million at February 28, 2021 and $ 248 million at November 30, 2020 of EURIBOR-based floating rate euro debt to fixed rate euro debt.

At February 28, 2021, these interest rate swaps settle through 2025.

These interest rate swap agreements effectively changed $ 212 million at May 31, 2021 and $ 248 million at November 30, 2020 of EURIBOR-based floating rate euro debt to fixed rate euro debt.

At May 31, 2021, these interest rate swaps settle through 2025.

Our derivative contracts include rights of offset with our counterparties.

We have elected to net certain of our derivative assets and liabilities within counterparties.

February 28, 2021

(in millions) Gross Amounts Gross Amounts Offset in the Balance Sheet Total Net Amounts Presented in the Balance Sheet Gross Amounts not Offset in the Balance Sheet Net Amounts

5 unchanged sentences

Liabilities $ 10 $ — $ 10 $ — $ 10

Table of C ontents

The effect of our derivatives qualifying and designated as hedging instruments recognized in other comprehensive income (loss) and in net income (loss) was as follows:

Three Months Ended February 28/29,

Three Months Ended May 31, Six Months Ended

(in millions) 2021 2020 2021 2020

30 unchanged sentences

We partially mitigate the currency exposure of our investments in foreign operations by designating a portion of our foreign currency debt and derivatives as hedges of these investments.

As of February 28, 2021, we have designated $ 718 million of our sterling-denominated debt as non-derivative hedges of our net investments in foreign operations.

For the three months ended February 28, 2021, we recognized $ 42 million of losses on these non-derivative net investment hedges in the cumulative translation adjustment section of other comprehensive income (loss).

As of May 31, 2021, we have designated $ 497 million of our sterling-denominated debt as non-derivative hedges of our net investments in foreign operations.

For the three and six months ended May 31, 2021, we recognized $ 8 million and $ 50 million of losses on these non-derivative net investment hedges in the cumulative translation adjustment section of other comprehensive income (loss).

We also have $ 9 billion of euro-denominated debt, which provides an economic offset for our operations with euro functional currency.

Table of C ontents

Newbuild Currency Risks

2 unchanged sentences

We use foreign currency derivative contracts to manage foreign currency exchange rate risk for some of our ship construction payments.

At February 28, 2021, our remaining newbuild currency exchange rate risk primarily relates to euro-denominated newbuild contract payments to non-euro functional currency brands, which represent a total unhedged commitment of $ 7.0 billion for newbuilds scheduled to be delivered through 2025.

At May 31, 2021, our remaining newbuild currency exchange rate risk primarily relates to euro-denominated newbuild contract payments to non-euro functional currency brands, which represent a total unhedged commitment of $ 6.8 billion for newbuilds scheduled to be delivered through 2025.

The cost of shipbuilding orders that we may place in the future that is denominated in a different currency than our cruise brands’ will be affected by foreign currency exchange rate fluctuations.

10 unchanged sentences

• Generally requiring collateral and/or guarantees to support notes receivable on significant asset sales, long-term ship charters and new ship progress payments to shipyards

At February 28, 2021, our exposures under derivative instruments were not material.

At May 31, 2021, our exposures under derivative instruments were not material.

We also monitor the creditworthiness of travel agencies and tour operators in Asia, Australia and Europe, which includes charter-hire agreements in Asia and credit and debit card providers to which we extend credit in the normal course of our business.

7 unchanged sentences

Our four reportable segments are comprised of (1) NAA cruise operations, (2) EA cruise operations, (3) Cruise Support and (4) Tour and Other.

Table of C ontents

The operating segments within each of our NAA and EA reportable segments have been aggregated based on the similarity of their economic and other characteristics, including geographic guest sourcing.

1 unchanged sentence

Our Tour and Other segment represents the hotel and transportation operations of Holland America Princess Alaska Tours and other operations.

Three Months Ended February 28/29,

Three Months Ended May 31,

(in millions) Revenues Operating costs and

13 unchanged sentences

$ 740 $ 2,484 $ 492 $ 577 $ ( 4,177 )

(a) Includes $ 300 million of goodwill impairment charges.

(a) Includes $ 1.0 billion of goodwill impairment charges.

(b) Includes $ 345 million of goodwill impairment charges.

Six Months Ended May 31,

(in millions) Revenues Operating costs and

expenses Selling

administrative Depreciation

amortization Operating

income (loss)

NAA $ 19 $ 680 $ 453 $ 676 $ ( 1,790 )

EA 41 496 239 370 ( 1,064 )

Cruise Support — 15 171 61 ( 247 )

Tour and Other 14 25 17 12 ( 39 )

$ 75 $ 1,216 $ 879 $ 1,119 $ ( 3,139 )

NAA $ 3,597 $ 3,904 $ 697 $ 733 $ ( 3,056 ) (c)

EA 1,790 2,090 333 334 ( 1,743 ) (d)

Cruise Support 66 ( 34 ) 126 64 ( 91 )

Tour and Other 76 47 14 16 —

$ 5,529 $ 6,007 $ 1,170 $ 1,147 $ ( 4,891 )

(d) Includes $ 777 million of goodwill impairment charges.

Revenue by geographic areas, which are based on where our guests are sourced, were as follows:

(in millions) Three Months Ended

February 29, 2020

(in millions) Three Months Ended May 31, 2020 Six Months Ended May 31, 2020

North America $ 404 $ 3,051

Europe 250 1,616

Australia and Asia 65 680

As a result of the pause in our guest cruise operations, we have experienced essentially no revenue for the three months ended February 28, 2021 and as a result current year data is not meaningful and is not included in the table.

$ 740 $ 5,529

As a result of the phased resumption of our guest cruise operations, we have experienced essentially no revenue for the three and six months ended May 31, 2021, as a result current year data is not meaningful and is not included in the table.

NOTE 7 – Earnings Per Share

Three Months Ended February 28/29,

Three Months Ended

May 31, Six Months Ended

(in millions, except per share data) 2021 2020 2021 2020

5 unchanged sentences

Diluted earnings per share $ ( 1.83 ) $ ( 6.07 ) $ ( 3.63 ) $ ( 7.34 )

Table of C ontents

Antidilutive shares excluded from diluted earnings per share computations were as follows:

Three Months Ended February 28/29,

Three Months Ended

May 31, Six Months Ended

(in millions) 2021 2020 2021 2020

5 unchanged sentences

NOTE 8 – Supplemental Cash Flow Information

(in millions) February 28, 2021 November 30, 2020

(in millions) May 31, 2021 November 30, 2020

Cash and cash equivalents (Consolidated Balance Sheets) $ 7,067 $ 9,513

2 unchanged sentences

NOTE 9 – Other Assets

We have a minority interest in the White Pass & Yukon Route (“White Pass”) that includes port, railroad and retail operations

in Skagway, Alaska.

We have a minority interest in the White Pass & Yukon Route (“White Pass”) that includes port, railroad and retail operations in Skagway, Alaska.

As a result of the effects of COVID-19 on the 2021 Alaska season, we evaluated whether our investment in White Pass was other than temporarily impaired and performed an impairment assessment during the quarter ended February 28, 2021.

As a result of our assessment, we recognized an impairment charge of $ 17 million for our investment in White Pass in other income (expense), net.

As of February 28, 2021, our investment in White Pass was $ 76 million, consisting of $ 57 million in equity and a loan of $ 19 million.

As of May 31, 2021, our investment in White Pass was $ 77 million, consisting of $ 53 million in equity and a loan of $ 23 million.

As of November 30, 2020, our investment in White Pass was $ 94 million, consisting of $ 75 million in equity and a loan of $ 19 million.

We have a minority interest in CSSC Carnival Cruise Shipping Limited (“CSSC-Carnival”), a China-based cruise company which will operate its own fleet designed to serve the Chinese market.

Our investment in CSSC-Carnival was $ 139 million as of February 28, 2021 and $ 140 million as of November 30, 2020.

Our investment in CSSC-Carnival was $ 229 million as of May 31, 2021 and $ 140 million as of November 30, 2020.

In December 2019, we sold to CSSC-Carnival a controlling interest in an entity with full ownership of two EA segment ships and recognized a related gain of $ 107 million, included in other operating expenses in our Consolidated Statements of Income (Loss).

As of February 28, 2021 and November 30, 2020, our investment in the minority interest of this entity was $ 283 million.

In April 2021, we sold to CSSC-Carnival our remaining $ 283 million investment in the minority interest of the same entity.

NOTE 10 – Property and Equipment

Since the pause in guest cruise operations, we have accelerated the removal of ships which were previously expected to be sold over the ensuing years.

During the first quarter of 2021, we completed the sale of one NAA segment ship, which represents a passenger-capacity reduction of 670 for our NAA segment.

Table of C ontents

During 2021, we completed the sale of one NAA segment ship, which represents a passenger-capacity reduction of 670 for our NAA segment.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements