What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-06-29 compared with 2022-03-28 · 170 added, 102 removed, 453 unchanged (38% of the section changed)

3 unchanged sentences

(in millions, except per share data)

Three Months Ended February 28,

Three Months Ended May 31, Six Months Ended

2022 2021 2022 2021

Passenger ticket $ 1,285 $ 20 $ 2,158 $ 23

Onboard and other 1,116 29 1,866 52

2,401 50 4,024 75

Operating Costs and Expenses

2 unchanged sentences

Payroll and related 533 241 1,038 460

Fuel 545 113 910 216

Food 191 17 327 28

Ship and other impairments — 49 8 49

Other operating 774 224 1,331 404

2,683 681 4,713 1,216

Selling and administrative 619 417 1,149 879

Depreciation and amortization 572 567 1,126 1,119

3,874 1,665 6,988 3,214

Operating Income (Loss) ( 1,473 ) ( 1,616 ) ( 2,964 ) ( 3,139 )

2 unchanged sentences

Interest expense, net of capitalized interest ( 370 ) ( 437 ) ( 738 ) ( 835 )

Gains (losses) on debt extinguishment, net — 2

Gain (loss) on debt extinguishment, net — 2 — 4

Other income (expense), net 6 ( 13 ) ( 26 ) ( 75 )

10 unchanged sentences

(in millions)

Three Months Ended February 28,

Three Months Ended May 31, Six Months Ended

2022 2021 2022 2021

Net Income (Loss) $ ( 1,834 ) $ ( 2,072 ) $ ( 3,726 ) $ ( 4,045 )

1 unchanged sentence

Change in foreign currency translation adjustment ( 260 ) 104 ( 246 ) 303

Other 3 3 5 7

Other Comprehensive Income (Loss) ( 257 ) 107 ( 241 ) 310

48 unchanged sentences

(in millions)

Three Months Ended February 28,

Six Months Ended May 31, 2022

OPERATING ACTIVITIES

21 unchanged sentences

Proceeds from sales of ships and other 55 324

Purchase of minority interest — ( 90 )

Purchase of short-term investments ( 315 ) ( 2,671 )

Proceeds from maturity of short-term investments 364 467

Derivative settlements and other, net 10 ( 27 )

17 unchanged sentences

(in millions)

Three Months Ended

stock Ordinary

3 unchanged sentences

stock Total shareholders’ equity

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

At February 28, 2022 $ 11 $ 361 $ 15,360 $ 4,493 $ ( 1,486 ) $ ( 8,428 ) $ 10,311

Net income (loss) — — — ( 1,834 ) — — ( 1,834 )

Other comprehensive income (loss) — — — — ( 257 ) — ( 257 )

Issuances of common stock, net — — 15 — — — 15

Purchases and issuances under the Stock Swap program, net — — 62 — — ( 57 ) 6

Issuance of treasury shares for vested share-based awards — — — ( 9 ) — 9 —

Share-based compensation and other — — 19 ( 1 ) — — 19

At May 31, 2022 $ 11 $ 361 $ 15,457 $ 2,649 $ ( 1,742 ) $ ( 8,476 ) $ 8,260

Six Months Ended

stock Ordinary

shares Additional

capital Retained

earnings AOCI Treasury

stock Total shareholders’ equity

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

Share-based compensation and other — — 32 — — — 32

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

Other — — 60 — — — 60

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

At November 30, 2021 $ 11 $ 361 $ 15,292 $ 6,448 $ ( 1,501 ) $ ( 8,466 ) $ 12,144

5 unchanged sentences

Share-based compensation and other — — 45 ( 1 ) — — 45

At February 28, 2022 $ 11 $ 361 $ 15,360 $ 4,493 $ ( 1,486 ) $ ( 8,428 ) $ 10,311

At May 31, 2022 $ 11 $ 361 $ 15,457 $ 2,649 $ ( 1,742 ) $ ( 8,476 ) $ 8,260

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

6 unchanged sentences

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

As of February 28, 2022, 71 % of our capacity had resumed guest cruise operations as part of our ongoing return to service.

As of May 31, 2022, 86 % of our capacity was in guest cruise operation as part of our ongoing return to service.

The extent of the effects of COVID-19 on our business are uncertain and will depend on future developments, including, but not limited to, the duration and continued severity of COVID-19 and the length of time it takes to return the company to profitability.

The ongoing resumption of our guest cruise operations and the increased uncertainty given the current invasion of Ukraine, including its effect on the price of fuel, are collectively having a material negative impact on our business, including our liquidity, financial position and results of operations.

COVID-19 and its ongoing effects, inflation and higher fuel prices are collectively having a material impact on our business, including our results of operations, liquidity and financial position.

The estimation of our future liquidity requirements includes numerous assumptions that are subject to various risks and uncertainties.

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

• Ongoing resumption of guest cruise operations, with each brand’s full fleet expected to be back in guest cruise operations for its respective summer season where we historically generate the largest share of our operating income

• Expected sustained increase in revenue per passenger cruise day through a combination of both passenger ticket and onboard revenue as compared to 2019

• Expected improvement in occupancy throughout 2022 until we return to historical occupancy levels in 2023

• Continued ongoing resumption of guest cruise operations, with 86 % of the fleet back in guest cruise operations as of May 31, 2022

• Expected increases in revenue in 2023 on a per passenger basis compared to 2019, particularly as the friction from restrictive protocols wanes

• Expected improvement in occupancy throughout 2022 and 2023

• Expected continued spend to maintain enhanced health and safety protocols and to support the ongoing resumption of guest cruise operations, including completing the return of crew members to our ships

• Fuel prices

• Expected moderation of fuel prices beginning in the second half of 2022 and continuing into 2023

• Expected inflation and supply chain challenges to continue to weigh on costs, though moderated by a larger, more efficient fleet as compared to 2019

• Maintaining collateral and reserves at reasonable levels

1 unchanged sentence

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

In addition, the magnitude and duration of the global pandemic and the current invasion of Ukraine are uncertain.

In addition, the magnitude and duration of the COVID-19 global pandemic and its ongoing effects, inflation and higher fuel prices are uncertain.

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

We have taken actions to improve our liquidity, including completing various capital market transactions, capital expenditure and operating expense reductions and accelerating the removal of certain ships from our fleet.

In addition, we expect to continue to pursue refinancing opportunities to reduce interest expense and extend maturities and if appropriate, obtain relevant financial covenant amendments.

Based on these actions and our assumptions regarding the impact of COVID-19, considering our $ 7.2 billion of liquidity including cash, short-term investments and borrowings available under our revolving facility at February 28, 2022, as well as our continued ongoing return to service, we have concluded that we have sufficient liquidity to satisfy our obligations for at least the next twelve months.

We took actions to improve our liquidity, including completing various capital market transactions, capital expenditure and operating expense reductions and accelerating the removal of certain ships from our fleet.

In addition, we expect to continue to pursue various capital market opportunities to extend maturities and if appropriate, obtain relevant financial covenant amendments.

Based on these actions and our assumptions regarding the impact of COVID-19, considering our $ 7.5 billion of liquidity including cash, short-term investments and borrowings available under our revolving facility at May 31, 2022, as well as our continued ongoing return to service, we have concluded that we have sufficient liquidity to satisfy our obligations for at least the next twelve months.

Basis of Presentation

The Consolidated Statements of Income (Loss), the Consolidated Statements of Comprehensive Income (Loss), the Consolidated Statements of Cash Flows and the Consolidated Statements of Shareholders’ Equity for the three months ended February 28, 2022 and 2021, and the Consolidated Balance Sheet at February 28, 2022 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, 2022 and 2021, the Consolidated Statements of Cash Flows for the six months ended May 31, 2022 and 2021 and the Consolidated Balance Sheet at May 31, 2022 are unaudited and, in the opinion of our management, contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement.

Our interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes included in the Carnival Corporation & plc 2021 joint Annual Report on Form 10-K (“Form 10-K”) filed with the U.S.

6 unchanged sentences

Accounting Pronouncements

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.

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No.

2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU No.

2020-04”), which provides temporary optional expedients and exceptions to accounting guidance on contract modifications and hedge accounting to ease entities’ financial reporting burdens as the market transitions from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates.

ASU 2020-04 is effective upon issuance and can be applied through December 31, 2022.

The use of LIBOR was phased out at the end of 2021, although the phase-out of U.S.

dollar LIBOR for existing agreements has been delayed until June 2023.

We continue to monitor developments related to the LIBOR transition and identification of an alternative, market-accepted rate.

In December 2021, we amended our £ 350 million long-term debt agreement which referenced the British Pound sterling (“GBP”) LIBOR to the Sterling Overnight Index Average (“SONIA”) and applied the practical expedient.

This amendment did not have a material impact on our consolidated financial statements.

As of May 31, 2022, approximately $ 8.5 billion of our outstanding indebtedness bears interest at floating rates referenced to U.S.

dollar LIBOR with maturity dates extending beyond June 30, 2023.

We are currently evaluating our contracts referenced to U.S.

dollar LIBOR and working with our creditors on updating credit agreements as necessary to include language regarding the successor or alternate rate to LIBOR.

We do not expect the adoption of this standard to have a material impact on our consolidated financial statements during the LIBOR transition period.

The FASB issued guidance, Debt - Debt with Conversion and Other 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.

4 unchanged sentences

NOTE 2 – Revenue and Expense Recognition

Guest cruise deposits are initially included in customer deposit liabilities when received.

Guest cruise deposits and advance onboard purchases are initially included in customer deposit liabilities when received.

Customer deposits are subsequently recognized as cruise revenues, together with revenues from onboard and other activities, and all associated direct costs and expenses of a voyage are recognized as cruise costs and expenses, upon completion of voyages with durations of ten nights or less and on a pro rata basis for voyages in excess of ten nights.

7 unchanged sentences

Passenger ticket revenues include fees, taxes and charges collected by us from our guests.

A portion of these fees, taxes and charges vary with guest head counts and are directly imposed on a revenue-producing arrangement.

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, 2022 and 2021, fees, taxes, and charges included in commissions, transportation and other costs were $ 68 million and $ 41 million.

The fees, taxes and charges that vary with guest head counts and are directly imposed on a revenue-producing arrangement are expensed in commissions, transportation and other costs when the corresponding revenues are recognized.

For the three and six months ended May 31, fees, taxes, and charges included in commissions, transportation and other costs were $ 96 million and $ 164 million in 2022 and were $ 5 million and $ 12 million in 2021.

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

4 unchanged sentences

These amounts include refundable deposits.

We have provided flexibility to guests with bookings on sailings cancelled due to itinerary disruptions by allowing guests to rebook at a future date, receive enhanced future cruise credits (“FCC”) or elect to receive refunds in cash.

In certain situations, we have provided flexibility to guests by allowing guests to rebook at a future date, receive future cruise credits (“FCCs”) or elect to receive refunds in cash.

We have at times issued enhanced FCCs.

Enhanced FCCs provide the guest with an additional credit value above the original cash deposit received, and the enhanced value is recognized as a discount applied to the future cruise in the period used.

2 unchanged sentences

We record a liability for unexpired FCCs to the extent we have received and not refunded cash from guests for cancelled bookings.

We had total customer deposits of $ 3.7 billion as of February 28, 2022 and $ 3.5 billion as of November 30, 2021 .

We had total customer deposits of $ 5.1 billion as of May 31, 2022 and $ 3.5 billion as of November 30, 2021 .

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

During the three months ended February 28, 2022 and 2021, we recognized revenues of $ 1.0 billion and an immaterial amount related to our customer deposits as of November 30, 2021 and 2020.

During the six months ended May 31, 2022 and 2021, we recognized revenues of $ 1.4 billion and an immaterial amount related to our customer deposits as of November 30, 2021 and 2020.

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

7 unchanged sentences

Contract Assets

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 had contract assets of $ 70 million as of February 28, 2022 and $ 55 million as of November 30, 2021 .

Contract assets are amounts paid prior to the start of a voyage as a result of obtaining the ticket contract and include prepaid travel agent commissions and prepaid credit and debit card fees.

We record these amounts within prepaid expenses and other and subsequently recognize these amounts as commissions, transportation and other at the time of revenue recognition or at the time of voyage cancellation.

We had contract assets of $ 208 million as of May 31, 2022 and $ 55 million as of November 30, 2021 .

NOTE 3 – Debt

Short-Term Borrowings

As of February 28, 2022 and November 30, 2021, our short-term borrowings consisted of $ 2.7 billion and $ 2.8 billion under our $ 1.7 billion, € 1.0 billion and £ 0.2 billion revolving credit facility (the “Revolving Facility”).

As of May 31, 2022 and November 30, 2021, our short-term borrowings consisted of $ 2.7 billion and $ 2.8 billion under our $ 1.7 billion, € 1.0 billion and £ 0.2 billion revolving credit facility (the “Revolving Facility”).

Export Credit Facility Borrowings

During the first quarter of 2022, we borrowed $ 2.3 billion under export credit facilities due in semi-annual installments through 2034.

During the six months ended May 31, 2022, we borrowed $ 2.3 billion under export credit facilities due in semi-annual installments through 2034.

2030 Senior Unsecured Notes

In May 2022, we issued an aggregate principal amount of $ 1.0 billion senior unsecured notes that mature on June 1, 2030 (the “2030 Senior Unsecured Notes”).

The 2030 Senior Unsecured Notes bear interest at a rate of 10.5 % per year.

Covenant Compliance

As of February 28, 2022, our Revolving Facility, unsecured loans and export credit facilities contain certain covenants, the most restrictive of which require us to:

• Maintain minimum interest coverage (adjusted EBITDA to consolidated net interest charges) at the end of each fiscal quarter from February 28, 2023, at a ratio of not less than 2.0 to 1.0 for the February 28, 2023 and May 31, 2023 testing dates, 2.5 to 1.0 for the August 31, 2023 and November 30, 2023 testing dates, and 3.0 to 1.0 for the February 29, 2024 testing date onwards, or through their respective maturity dates

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

• Maintain minimum interest coverage (adjusted EBITDA to consolidated net interest charges) at the end of each fiscal quarter from August 31, 2023, at a ratio of not less than 2.0 to 1.0 for the August 31, 2023 testing date, 2.5 to 1.0 for the November 30, 2023 testing date, and 3.0 to 1.0 for the February 29, 2024 testing date onwards, or through their respective maturity dates

• Maintain minimum shareholders’ equity of $ 5.0 billion

3 unchanged sentences

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

At February 28, 2022, we were in compliance with the applicable covenants under our debt agreements.

At May 31, 2022, we were in compliance with the applicable covenants under our debt agreements.

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

1 unchanged sentence

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

As of February 28, 2022, the scheduled maturities of our debt are as follows:

As of May 31, 2022, the scheduled maturities of our debt are as follows:

(in millions)

7 unchanged sentences

We may continue to re-borrow or otherwise utilize available amounts under the Revolving Facility through August 2024, subject to satisfaction of the conditions in the facility.

We had $ 0.3 billion available for borrowing under our Revolving Facility as of February 28, 2022.

We had $ 0.3 billion available for borrowing under our Revolving Facility as of May 31, 2022.

The Revolving Facility also includes an emissions linked margin adjustment whereby, after the initial applicable margin is set per the margin pricing grid, the margin may be adjusted based on performance in achieving certain agreed annual carbon emissions goals.

11 unchanged sentences

District Court for the Southern District of Florida under Title III of the Cuban Liberty and Democratic Solidarity Act, also known as the Helms-Burton Act, alleging that Carnival Corporation “trafficked” in confiscated Cuban property when certain ships docked at certain ports in Cuba, and that this alleged “trafficking” entitles the plaintiffs to treble damages.

In the matter filed by Havana Docks

Corporation, the hearings on motions for summary judgment were concluded on January 18, 2022.

In the matter filed by Havana Docks Corporation, the hearings on motions for summary judgment were concluded on January 18, 2022.

On March 21, 2022, the court granted summary judgment in favor of Havana Docks Corporation as to liability.

The amount of damages will be determined at the trial currently scheduled for May 23, 2022.

We are assessing our options, including appealing this order.

In the matter filed by Javier Bengochea, on October 4, 2021, the U.S.

Court of Appeals for the Eleventh Circuit Court heard oral arguments and on December 20, 2021, the court issued an order inviting an amicus brief from the U.S.

The amount of damages will be determined at trial.

On March 30, 2022, we filed a motion seeking clarification on a portion of the court’s order granting summary judgment as to liability.

On May 9, 2022, the court granted the motion for clarification, vacating the portion of the March 21, 2022 order that had granted summary judgment in favor of plaintiff upon our Fifth Amendment affirmative defense.

On March 30, 2022, we also filed a motion for interlocutory appeal and to stay.

On May 13, 2022, the court denied this motion.

The court has moved the trial date to September 19, 2022.

In the matter filed by Javier Bengochea on December 20, 2021, the court issued an order inviting an amicus brief from the U.S.

government on several issues involved in the appeal.

government filed its brief and the court ordered the parties to respond.

On May 6, 2022 we filed our response brief.

We continue to believe we have a meritorious defense to these actions and we believe that any final liability which may arise as a result of these actions is unlikely to have a material impact on our consolidated financial statements.

3 unchanged sentences

DeCurtis seeks damages, including its fees and costs, and seeks declarations that it is not infringing and/or that Carnival Corporation’s patents are unenforceable.

On April 10, 2020, Carnival Corporation filed an action against DeCurtis in the Southern District of Florida for breach of contract, trade secrets violations and patent infringement.

On April 10, 2020, Carnival Corporation filed an action against DeCurtis in the U.S.

District Court for the Southern District of Florida for breach of contract, trade secrets violations and patent infringement.

Carnival Corporation seeks damages, including its fees and costs, as well as an order permanently enjoining DeCurtis from engaging in such activities.

These two cases have now been consolidated in the Southern District of Florida.

The parties’ motions to dismiss in both actions have been granted in part and denied in part.

Answers have been filed by both parties.

On April 25, 2022, we moved for summary judgment on our breach of contract claims and on all of DeCurtis’s claims.

DeCurtis also filed a motion for summary judgment on certain portions of our claims.

Both motions for summary judgment are fully briefed.

We believe the ultimate outcome will not have a material impact on our consolidated financial statements.

2 unchanged sentences

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

Private parties have brought approximately 73 individual lawsuits as of February 28, 2022 in several U.S.

Private parties have brought approximately 73 individual lawsuits as of May 31, 2022 in several U.S.

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

3 unchanged sentences

A smaller number of actions include wrongful death claims.

As of February 28, 2022, 63 of these individual actions have now been dismissed or settled and ten remain.

These actions were settled for immaterial amounts.

Additionally, as of February 28, 2022, 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.

As of May 31, 2022, 63 of these individual actions have now been dismissed or settled for immaterial amounts and 10 remain.

Additionally, as of May 31, 2022, 10 purported class actions have been brought by former guests from Ruby Princess , Diamond Princess , Grand Princess , Coral Princess and Zaandam in several U.S.

federal courts and in the Federal Court of Australia.

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

As of February 28, 2022, nine of these class actions have either been settled individually or had their class allegations dismissed by the courts and one remains.

These actions were settled for immaterial amounts.

As of May 31, 2022, eight of these class actions have either been settled individually for immaterial amounts or had their class allegations dismissed by the courts and two remain.

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

3 unchanged sentences

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

The plaintiffs filed a second amended complaint on July 2, 2021 and on August 6, 2021, we filed a motion to dismiss, which has now been fully briefed.

On March 30, 2022, the court granted our motion to dismiss with prejudice and no appeal was filed prior to the deadline.

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

7 unchanged sentences

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

We responded to a cybersecurity event in May 2019 related to our email accounts, and detected ransomware attacks in August 2020 and December 2020 which resulted in unauthorized access to our information technology systems.

We responded to a cybersecurity event in May 2019 related to our email accounts, and detected ransomware attacks in August 2020 and December 2020, each of which resulted in unauthorized access to our information technology systems.

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

• For the May 2019 and August 2020 events, the investigation, communication and reporting phases are complete.

We determined that, for each event, an unauthorized third-party gained access to certain email accounts, which contained personal information relating to some guests, employees and crew for some of our operations.

• For the December 2020 event, the investigation, communication and reporting phases are complete.

Regulators were notified, and several, including the primary regulatory authority in the European Union, have closed their files on this matter.

• For the May 2019 event, the investigation, communication and reporting phases are complete.

An unauthorized third-party gained access to certain email accounts, which contained personal information relating to some guests, employees and crew for some of our operations.

• For the August 2020 and December 2020 events, the investigation, communication and reporting phases are complete.

An unauthorized third-party gained access to certain of our information security systems, deployed ransomware and obtained personal information related to guests, employees and crew for some of our operations.

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 have completed their investigation of a data security event announced in March 2020, and the Company is currently negotiating a settlement with the relevant State Attorneys General.

On June 24, 2022, we finalized a settlement with NY DFS, pursuant to which we will pay an amount that will not have a material impact on our consolidated financial statements.

In addition, State Attorneys General from 46 states have completed their investigation of the May 2019 event.

On June 22, 2022, we finalized a settlement with the State Attorneys General from these 46 states, pursuant to which we will pay an amount that will not have a material impact on our consolidated financial statements .

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

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

While 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.

We are subject to a court-ordered environmental compliance plan supervised by the U.S.

District Court for the Southern District of Florida, which is operative until mid-April 2022 and subjects our operations to additional review and other obligations.

Failure to comply with the requirements of this environmental compliance plan or other special conditions of probation could result in fines, which the court has imposed in the past, including during the three months ended February 28, 2022 as reported in the Form 10-K, and restrictions on our operations.

While these incidents are not expected to have a material adverse effect on our business, results of operations, financial position or liquidity, no assurances can be given about the future and we may be subject to future litigation, attacks or incidents that could have such a material adverse effect.

On March 14, 2022, the United States Department of Justice and the United States 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.

We do not expect this matter to have a material effect on our financial results.

We do not expect this matter to have a material impact on our consolidated financial statements.

Other Contingent Obligations

5 unchanged sentences

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

As of February 28, 2022 and November 30, 2021 , we had $ 1.1 billion in reserve funds related to our customer deposits withheld to satisfy these requirements which are included within other assets.

As of May 31, 2022 and November 30, 2021 , we had $ 1.4 billion and $ 1.1 billion in reserve funds related to our customer deposits provided to satisfy these requirements which are included within other assets.

We continue to expect to provide reserve funds under these agreements.

Additionally, as of February 28, 2022 and November 30, 2021, we had $ 30 million of cash collateral in escrow which is included within other assets.

Additionally, as of May 31, 2022 and November 30, 2021, we had $ 30 million of cash collateral in escrow which is included within other assets.

Ship Commitments

As of February 28, 2022, we expect the timing of our new ship growth capital commitments to be as follows:

As of May 31, 2022, we expect the timing of our new ship growth capital commitments to be as follows:

(in millions)

Remainder of 2022 $ 1,535

2024 1,608 (a)

(a) Includes a ship subject to financing

NOTE 5 – Fair Value Measurements, Derivative Instruments and Hedging Activities and Financial Risks

8 unchanged sentences

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

February 28, 2022 November 30, 2021

May 31, 2022 November 30, 2021

Value Fair Value Carrying

8 unchanged sentences

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

February 28, 2022 November 30, 2021

May 31, 2022 November 30, 2021

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

9 unchanged sentences

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

(in millions) NAA

Segment (a) EA

Segment (b) Total

November 30, 2021 $ 579 $ — $ 579

Exchange movements — — —

February 28, 2022 $ 579 $ — $ 579

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

(b) Europe and Asia ( “ EA”)

At May 31, 2022 and November 30, 2021, goodwill for our North America and Australia (“NAA”) segment was $ 579 million.

We had no goodwill for our Europe and Asia ( “ EA”) segment at May 31, 2022 and November 30, 2021.

(in millions) NAA

2 unchanged sentences

Exchange movements — ( 13 ) ( 13 )

February 28, 2022 $ 927 $ 248 $ 1,175

May 31, 2022 $ 927 $ 234 $ 1,161

Impairment of Ships

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

As a result of the continued effect of COVID-19 on our business, and our updated expectations of the estimated selling values for certain of our ships, we determined that a ship had a net carrying value that exceeded its estimated discounted future cash flows.

We compared the estimated selling value to the net carrying value and, as a result, recognized ship impairment charges as summarized in the table below.

We compared the estimated selling value to the net carrying value and, as a result, recognized ship impairment charges as summarized in the table below during the first quarter of 2022.

The principal assumption used in our cash flow analyses was the timing of the sale and its proceeds, which is considered a Level 3 input.

2 unchanged sentences

The impairment charges summarized in the table below are included in ship and other impairments in our Consolidated Statements of Income (Loss).

(in millions) February 28, 2022

Three Months Ended May 31, Six Months Ended

(in millions) 2022 2021 2022 2021

NAA Segment $ — $ — $ 8 $ —

EA Segment — 49 — 49

Total ship impairments $ — $ 49 $ 8 $ 49

We did not recognize any ship impairment charges for the three months ended February 28, 2021.

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, 2022 November 30, 2021

(in millions) Balance Sheet Location May 31, 2022 November 30, 2021

Derivative assets

8 unchanged sentences

Total derivative liabilities $ 18 $ 13

(a) At February 28, 2022, we had cross currency swaps totaling $ 598 million that are designated as hedges of our net investment in foreign operations with euro-denominated functional currencies.

At February 28, 2022, these cross currency swaps settle through 2028.

(a) At May 31, 2022, we had cross currency swaps totaling $ 665 million that are designated as hedges of our net investment in foreign operations with euro-denominated functional currencies.

At May 31, 2022, these cross currency swaps settle through 2027.

(b) 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 $ 147 million at February 28, 2022 and $ 160 million at November 30, 2021 of EURIBOR-based floating rate euro debt to fixed rate euro debt.

At February 28, 2022, these interest rate swaps settle through 2025.

These interest rate swap agreements effectively changed $ 116 million at May 31, 2022 and $ 160 million at November 30, 2021 of EURIBOR-based floating rate euro debt to fixed rate euro debt.

At May 31, 2022, 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, 2022

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

(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

6 unchanged sentences

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,

Three Months Ended May 31, Six Months Ended

(in millions) 2022 2021 2022 2021

28 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, 2022, we have designated $ 469 million of our sterling-denominated debt as non-derivative hedges of our net investments in foreign operations.

For the three months ended February 28, 2022, we recognized $ 2 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, 2022, we have designated $ 442 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, 2022, we recognized $ 28 million and $ 25 million of gains on these non-derivative net investment hedges in the cumulative translation adjustment section of other comprehensive income (loss).

We also have euro-denominated debt, including the effect of cross currency swaps, which provides an economic offset for our operations with euro functional currency.

2 unchanged sentences

Our decision to hedge a non-functional currency ship commitment for our cruise brands is made on a case-by-case basis, considering the amount and duration of the exposure, market volatility, economic trends, our overall expected net cash flows by currency and other offsetting risks.

At February 28, 2022, 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 $ 6.1 billion for newbuilds scheduled to be delivered through 2025.

At May 31, 2022, 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 $ 5.6 billion for newbuilds scheduled to be delivered through 2025.

The cost of shipbuilding orders that we may place in the future that are 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, 2022, our exposures under derivative instruments were not material.

At May 31, 2022, 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.

11 unchanged sentences

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,

Three Months Ended May 31,

(in millions) Revenues Operating costs and

13 unchanged sentences

$ 50 $ 681 $ 417 $ 567 $ ( 1,616 )

Six Months Ended May 31,

(in millions) Revenues Operating costs and

expenses Selling

administrative Depreciation

amortization Operating

income (loss)

NAA $ 2,792 $ 3,055 $ 710 $ 687 $ ( 1,661 )

EA 1,123 1,546 352 359 ( 1,134 )

Cruise Support 73 54 75 68 ( 126 )

Tour and Other 37 57 12 11 ( 44 )

$ 4,024 $ 4,713 $ 1,149 $ 1,126 $ ( 2,964 )

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 )

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

(in millions) Three Months Ended February 28, 2022

(in millions) Three Months Ended May 31, 2022 Six Months Ended May 31, 2022

North America $ 1,620 $ 2,738

Europe 741 1,220

Australia and Asia 15 23

As a result of the pause in our guest cruise operations, revenue data for the three months ended February 28, 2021 is not included in the table.

$ 2,401 $ 4,024

As a result of the pause in our guest cruise operations, revenue data for the three and six months ended May 31, 2021 is not included in the table.

NOTE 7 – Earnings Per Share

Three Months Ended

May 31, Six Months Ended

(in millions, except per share data) 2022 2021 2022 2021

7 unchanged sentences

Three Months Ended

May 31, Six Months Ended

(in millions) 2022 2021 2022 2021

3 unchanged sentences

NOTE 8 – Supplemental Cash Flow Information

(in millions) February 28, 2022 November 30, 2021

(in millions) May 31, 2022 November 30, 2021

Cash and cash equivalents (Consolidated Balance Sheets) $ 7,054 $ 8,939

1 unchanged sentence

Total cash, cash equivalents and restricted cash (Consolidated Statements of Cash Flows) $ 7,089 $ 8,976

For the three months ended February 28, 2022 and 2021, we did no t have borrowings or repayments of commercial paper with original maturities greater than three months.

For the six months ended May 31, 2022 and 2021, we did no t have borrowings or repayments of commercial paper with original maturities greater than three months.

NOTE 9 – Property and Equipment

During 2022, we entered into agreements to sell two NAA segment ships and completed the sale of one EA segment ship, which represent a passenger-capacity reduction of 4,110 for our NAA segment and 1,410 for our EA segment.

During 2022, we entered into an agreement to sell one NAA segment ship and completed the sales of one NAA segment ship and one EA segment ship, which collectively represent a passenger-capacity reduction of 4,110 for our NAA segment and 1,410 for our EA segment.

Refer to Note 5 - “Fair Value Measurements, Derivative Instruments and Hedging Activities and Financial Risks, Nonfinancial Instruments that are Measured at Fair Value on a Nonrecurring Basis, Impairment of Ships” for additional discussion.

1 unchanged sentence

We have a program that 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 (the “Stock Swap Program”).

During the three months ended February 28, 2022, under the Stock Swap Program, we sold 1.3 million of Carnival Corporation’s common stock and repurchased the same amount of Carnival plc ordinary shares, resulting in net proceeds of $ 2 million, which were used for general corporate purposes.

During the three months ended February 28, 2021, there were no sales or repurchases under the Stock Swap Program.

Additionally, during the three months ended February 28, 2022, we sold 0.8 million shares of Carnival Corporation common stock at an average price per share of $ 20.18 , resulting in net proceeds of $ 15 million.

During the three and six months ended May 31, 2022, under the Stock Swap Program, we sold 3.9 million and 5.2 million of Carnival Corporation’s common stock and repurchased the same amount of Carnival plc ordinary shares, resulting in net proceeds of $ 6 million and $ 8 million, which were used for general corporate purposes.

During the three and six months ended May 31, 2021, there were no sales or repurchases under the Stock Swap Program.

Additionally, during the three and six months ended May 31, 2022, we sold 0.8 million and 1.6 million shares of Carnival Corporation common stock at an average price per share of $ 18.54 and $ 19.27 , resulting in net proceeds of $ 15 million and $ 30 million.

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