What changed in this filing

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Item 1A. Risk Factors

2021-06-28 compared with 2021-04-07 · 38 added, 47 removed, 93 unchanged (48% of the section changed)

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We implemented a pause of our guest cruise operations in mid-March 2020 across all brands.

Although we began the resumption of limited guest cruise operations in September 2020 with cruises by Costa and in October 2020 with cruises by AIDA, as of February 28, 2021, none of our ships were operating with guests onboard.

The pause with respect to these and other brands and ships may be prolonged.

In addition, we have been, and will continue to be negatively impacted by related developments, including heightened governmental regulations, travel bans and travel advisories and restrictions and recommendations by the U.S.

Department of State, the Centers for Disease Control and Prevention (“CDC”) and other governmental authorities.

We incurred significant costs as we paused our guest cruise operations, provided air transportation to return our passengers to their home destinations, repatriated shipboard team members and assisted some of our crew that were unable to return home with food and housing.

We will continue to incur COVID-19 related costs as we implement additional hygiene-related protocols to our ships, as well as prepare for the continued resumption of guest cruise operations.

In addition, the industry is subject to and may be further subject to enhanced health and hygiene requirements in attempts to counteract future outbreaks, and these requirements may be costly and take a significant amount of time to implement across our global cruise operations.

In October 2020, the CDC announced a framework for a phased resumption of cruise ship passenger operations in U.S.

waters that is currently uncertain and will require further evaluation as we seek to resume operations.

Implementing these requirements may result in an increase in costs and take time before the resumption of our guest cruise operations.

As of May 31, 2021, five of our ships were operating with guests onboard as part of our phased return to service.

We have been, and will continue to be negatively impacted by travel bans and advisories, and evolving, conflicting and complex restrictions, recommendations and regulations set by various governmental authorities.

These restrictions, recommendations and regulations have and may continue to impact our ability to operate our business in an optimal manner.

As we continue to resume guest cruise operations, we expect to incur incremental spend relating to bringing our ships out of pause status, returning crew members to our ships and implementing enhanced health and safety protocols.

The industry is subject to and may be further subject to enhanced health and hygiene requirements in attempts to counteract future outbreaks, and these requirements may be costly, take a significant amount of time to implement across our global cruise operations, and may result in disruptions in guest cruise operations, incremental costs and loss of revenue.

We intend to make vaccines available to all of our crew but there can be no assurances that we will be able to source sufficient vaccines for our global crew.

In addition, although vaccines have proven to be effective in mitigating this risks of continued spread of COVID-19, there is no guarantee that the vaccines will continue to be effective against future variants.

Due to the outbreak of COVID-19 on some of our ships, and the resulting illness and loss of life in certain instances, we have been the subject of negative publicity, which could have a long term impact on the appeal of our brands, which would diminish demand for vacations on our vessels.

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We also remain subject to extensive, complex, and closely monitored obligations under the court-ordered environmental compliance plan supervised by the U.S.

District Court for the Southern District of Florida, as a result of the

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previously disclosed settlement agreement relating to the violation of probation conditions for a plea agreement entered into by Princess Cruises and the U.S.

District Court for the Southern District of Florida, as a result of the previously disclosed settlement agreement relating to the violation of probation conditions for a plea agreement entered into by Princess Cruises and the U.S.

Department of Justice in 2016.

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We have insurance coverage for certain liabilities, costs and expenses related to COVID-19 through our participation in Protection and Indemnity (“P&I”) clubs, including coverage for direct and incremental costs including, but not limited to, certain quarantine expenses and for certain liabilities to passengers and crew.

P&I clubs are mutual indemnity associations owned by members.

P&I clubs are mutual indemnity associations

owned by members.

There is a $10 million deductible per occurrence (meaning per outbreak on a particular ship).

We cannot assure you that we will receive insurance proceeds that will compensate us fully for our liabilities, costs and expenses that exceed the $10 million deductible under these policies.

We cannot provide assurance that we will receive insurance proceeds that will compensate us fully for our liabilities, costs and expenses that exceed the $10 million deductible under these policies.

We have no insurance coverage for loss of revenues or earnings from our ships or other operations.

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We have sold, expect to sell or have agreements for the disposal of various vessels.

Some of these agreements for the disposal of vessels are for recycling.

Some of these agreements for the disposal of vessels have been for recycling.

When we choose to dispose of a ship, there can be no assurance that there will be a viable buyer to purchase it at a price that exceeds our net book value, which could result in ship impairment charges and losses on ship disposals.

The effects of COVID-19 on the operations of shipyards where our ships are under construction will result in a delay in ship deliveries.

We cannot predict the timing of our complete return to service and when various ports will reopen to our ships.

If we are delayed in recommencing guest cruise operations or there is a further pause in the resumption of limited guest cruise operations, it could further negatively impact our liquidity.

As our business is seasonal, the impact of a delay or further pause in the resumption of guest cruise operations will be heightened if such delay or pause occurs during the Northern Hemisphere summer months.

Moreover, even as travel advisories and restrictions are lifted, demand for cruises may remain weak for a significant length of time and we cannot predict if and when each brand will return to pre-outbreak demand or fare pricing.

The effects of COVID-19 on the operations of shipyards where our ships are under construction have resulted in delays in ship deliveries.

We cannot predict the timing of our complete return to service at historical occupancy and pricing levels and when various ports will reopen to our ships.

If our phased resumption of guest cruise operations is delayed or there are future pauses or disruptions in the resumption of guest cruise operations, it could further negatively impact our liquidity.

As our business is seasonal, the impact of such a delay or future pause in the resumption of guest cruise operations will be heightened if such delay or future pause occurs during the Northern Hemisphere summer months.

Moreover, even as travel advisories and restrictions are lifted, demand for cruises may be impacted for a significant length of time and we cannot predict if and when each brand will return to pre-outbreak demand or fare pricing.

In particular, our bookings may be negatively impacted by the adverse changes in the perceived or actual economic climate, including higher unemployment rates, declines in income levels and loss of personal wealth resulting from the impact of COVID-19.

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We have never previously experienced a complete cessation of our guest cruise operations, and as a consequence, our ability to be predictive regarding the impact of such a cessation on our brands and future prospects is uncertain.

In particular, we cannot predict the impact on our financial performance and cash flows (including as required for cash refunds of deposits) as a result of the current pause in our guest cruise operations, which may be prolonged, and the public’s concern regarding the health and safety of travel, especially by cruise ship, and related decreases in demand for travel and cruising.

In particular, we cannot predict the impact on our financial performance and cash flows (including as required for cash refunds of deposits) as a result of the phased resumptions in our guest cruise operations and the public’s concern regarding the health and safety of travel, especially by cruise ship, and related decreases in demand for travel and cruising.

Moreover, our ability to attract and retain guests and our ability to hire and the amounts we must pay our crew depends, in part, upon the perception and reputation of our company and our brands and the public’s concerns regarding the health and safety of travel generally, as well as regarding the cruising industry and our ships specifically.

In addition, our ability to re-hire crew may be negatively impacted as some have obtained alternative employment during the pause.

Our access to and cost of financing depends on, among other things, global economic conditions, conditions in the global financing markets, the availability of sufficient amounts of financing, our prospects and our credit ratings.

As a result of COVID-19's effects on our operations, Moody's and S&P Global have downgraded our credit ratings to be non-investment grade.

If we are delayed in recommencing guest cruise operations or there is a further pause in the resumption of limited guest cruise operations, our credit ratings were to be further downgraded, or general market conditions were to ascribe higher risk to our rating levels, our industry, or us, our access to capital and the cost of any debt or equity financing will be further negatively impacted.

As a result of COVID-19's effects on our operations, Moody's and S&P Global downgraded our credit ratings to be non-investment grade.

If our credit ratings were to be further downgraded, or general market conditions were to ascribe higher risk to our rating levels, our industry, or us, our access to capital and the cost of any debt or equity financing will be further negatively impacted.

In addition, the terms of future debt agreements could include more restrictive covenants, or require incremental collateral, which may further restrict our business operations or be unavailable due to our covenant restrictions then in effect.

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In addition, the COVID-19 outbreak has significantly increased economic and demand uncertainty.

The current outbreak and continued spread of COVID-19 has caused a global recession, which could have a further adverse impact on our financial condition and operations.

The effects of COVID-19 have caused a global recession, which could have a further adverse impact on our financial condition and operations.

In past recessions, demand for our cruise vacations has been significantly negatively impacted which has resulted in lower occupancy rates and adverse pricing, with a corresponding increase in the use of credits and other means to attract travelers.

Significant increases in unemployment in the U.S.

and other regions due to the adoption of physical distancing and other policies to slow the spread of the virus have had, and are likely to continue to have, a negative impact on booking demand for our guest cruise operations, and these impacts could exist for an extensive period of time.

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As a result of the impact of COVID-19, we expect lower occupancy levels during our resumption of guest cruise operations and cannot predict when we will be able to achieve historical occupancy levels.

The extent of the effects of the outbreak on our business and the cruising industry at large is highly uncertain and will ultimately depend on future developments, including, but not limited to, the duration and severity of the outbreak, the length of time it takes for demand and pricing to return and normal economic and operating conditions to resume.

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Under the terms of certain of our export credit facilities, we are required to comply with the Interest Coverage Covenant of not less than 3.0 to 1.0, and ensure that our Debt to Capital Covenant does not exceed 65% at the end of each fiscal quarter.

As of February 28, 2021 (and while being in compliance with the Debt to Capital Covenant as of such date), we obtained waivers of compliance with the Interest Coverage Covenant and Debt to Capital Covenant in our export credit facilities through August 31, 2022 (with the next testing date of November 30, 2022) or November 30, 2022 (with the next testing date of February 28, 2023) for our funded export credit facilities with aggregate indebtedness of $8.9 billion as of February 28, 2021 and unfunded export credit facilities with an aggregate principal amount of $6.5 billion as of February 28, 2021.

During the first quarter of 2021 (and while being in compliance with the Debt to Capital Covenant as of such date), we obtained waivers of compliance with the Interest Coverage Covenant and Debt to Capital Covenant in our export credit facilities through August 31, 2022 (with the next testing date of November 30, 2022) or November 30, 2022 (with the next testing date of February 28, 2023) for our funded export credit facilities with aggregate indebtedness of $8.8 billion as of May 31, 2021 and unfunded export credit facilities with an aggregate principal amount of $6.5 billion as of May 31, 2021.

During the first quarter of 2021 we entered into supplemental agreements with respect to our Revolving Credit Facility and many of our bank loans.

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From the November 30, 2021 testing date until the May 31, 2023 testing date the Debt to Capital Covenant is not to exceed 75%, following which it will be tested at levels which decline ratably to 65% from the May 31, 2024 testing date onwards.

Even though we expect to obtain further amendments under our debt facilities with respect to the Interest Coverage Covenant or the Debt to Capital Covenant, if such amendments are not obtained we may be required to take certain actions, which in the case of the Debt to Capital Covenant could include issuing additional equity and/or reducing our indebtedness, failing which we may not be in compliance with the Interest Coverage Covenant or the Debt to Capital Covenant following August 31, 2022 with the next testing date of November 30, 2022 for such debt facilities, or as of future testing dates for certain agreements, because of the pause and limited resumptions of our guest cruise operations.

Amendments and waivers of the Interest Coverage Covenant and Debt to Capital Covenant have led and may continue to lead to increased costs, increased interest rates, additional restrictive covenants and other lender protections that are, or may become, applicable to us under these debt facilities, and such increased costs, restrictions and modifications may vary among debt facilities.

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In addition, we have agreed to additional restrictive covenants in such facilities and agreements with respect to debt incurrence, lien incurrence, restricted payments and investments that are substantially consistent with those contained in the indentures governing our recent unsecured notes issuances.

In May and June 2021, the subsidiaries that guarantee our 2026 Senior Unsecured Notes and the 2027 Senior Unsecured Notes agreed to guarantee certain of our debt that was outstanding prior to April 2020, including our Revolving Credit Facility.

These subsidiaries are expected to enter into additional agreements to guarantee additional debt under certain of our export credit facilities.

Our ability to provide additional lender protections under these facilities, including the granting of security interests in certain collateral and the granting of guarantees with respect to certain outstanding debt, will be limited by the terms of such agreements as amended, and our other debt facilities.

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As a result, the failure to obtain the financial covenant amendments described above would have a material adverse effect.

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INDEX TO EXHIBITS

9 unchanged sentences

Material Contracts

10.1 Indenture dated as of February 16, 2021 among Carnival Corporation as issuer, Carnival plc, the other Guarantors party thereto and U.S.

Bank, National Association, as trustee, principal paying agent, transfer agent and registrar, relating to the 5.75% Senior Unsecured Notes due 2027

10.2 Form of Executive Time-Based Restricted Share Unit Agreement for the Carnival plc 2014 Employee Share Plan

10.3 Form of Executive Time-Based Restricted Stock Unit Agreement for the Carnival Corporation 2020 Stock Plan

10.1 Amendment of the Carnival Corporation 2020 Stock Plan

10.2 Amendment Agreement dated May 11, 2021 to the Multicurrency Revolving Facilities Agreement originally dated May 18, 2011, as amended and restated on August 6, 2019 and further amended on December 31, 2020, among Carnival Corporation, Carnival plc and certain of Carnival Corporation and Carnival plc subsidiaries, Bank of America Europe Designated Activity Company as facilities agent and a syndicate of financial institutions

Rule 13a-14(a)/15d-14(a) certifications

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31.4 Certification of Chief Financial Officer and Chief Accounting Officer of Carnival plc pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

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INDEX TO EXHIBITS

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Interactive Data File

101 The consolidated financial statements from Carnival Corporation & plc’s joint Quarterly Report on Form 10-Q for the quarter ended February 28, 2021, as filed with the Securities and Exchange Commission on April 7, 2021, formatted in Inline XBRL, are as follows:

(i) the Consolidated Statements of Income (Loss) for the three months ended February 28/29, 2021 and 2020;

(ii) the Consolidated Statements of Comprehensive Income (Loss) for the three months ended February 28/29, 2021 and 2020;

(iii) the Consolidated Balance Sheets at February 28, 2021 and November 30, 2020;

(iv) the Consolidated Statements of Cash Flows for the three months ended February 28/29, 2021 and 2020;

(v) the Consolidated Statements of Shareholders’ Equity for the three months ended February 28/29, 2021 and 2020;

101 The consolidated financial statements from Carnival Corporation & plc’s joint Quarterly Report on Form 10-Q for the quarter ended May 31, 2021, as filed with the Securities and Exchange Commission on June 28, 2021, formatted in Inline XBRL, are as follows:

(i) the Consolidated Statements of Income (Loss) for the three and six months ended May 31, 2021 and 2020;

(ii) the Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended May 31, 2021 and 2020;

(iii) the Consolidated Balance Sheets at May 31, 2021 and November 30, 2020;

(iv) the Consolidated Statements of Cash Flows for the six months ended May 31, 2021 and 2020;

(v) the Consolidated Statements of Shareholders’ Equity for the three and six months ended May 31, 2021 and 2020;

(vi) the notes to the consolidated financial statements, tagged in summary and detail.

104 The cover page from Carnival Corporation & plc’s joint Quarterly Report on Form 10-Q for the quarter ended February 28, 2021, as filed with the Securities and Exchange Commission on April 7, 2021, formatted in Inline XBRL (included as Exhibit 101)

104 The cover page from Carnival Corporation & plc’s joint Quarterly Report on Form 10-Q for the quarter ended May 31, 2021, as filed with the Securities and Exchange Commission on June 28, 2021, formatted in Inline XBRL (included as Exhibit 101)

* These items are furnished and not filed.

** Certain portions of this exhibit have been omitted pursuant to Item 601(b)(10) of Regulation S-K.

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Pursuant to the requirements of the Securities Exchange Act of 1934, each of the registrants has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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Chief Financial Officer and Chief Accounting Officer Chief Financial Officer and Chief Accounting Officer

April 7, 2021 Date:

April 7, 2021

June 28, 2021 Date:

June 28, 2021

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 1A. Risk Factors