What changed in this filing

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Item 1. Financial Statements

2022-09-30 compared with 2022-06-29 · 200 added, 117 removed, 506 unchanged (39% of the section changed)

3 unchanged sentences

(in millions, except per share data)

Three Months Ended May 31, Six Months Ended

Three Months Ended August 31, Nine Months Ended

2022 2021 2022 2021

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(in millions)

Three Months Ended May 31, Six Months Ended

Three Months Ended August 31, Nine Months Ended

2022 2021 2022 2021

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(in millions)

Six Months Ended May 31, 2022

Nine Months Ended August 31, 2022

OPERATING ACTIVITIES

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Principal repayments of long-term debt ( 1,073 ) ( 3,507 )

Premium paid on extinguishment of debt — ( 286 )

Proceeds from issuance of long-term debt 3,334 7,900

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stock Total shareholders’ equity

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

Net income (loss) — — — ( 2,836 ) — — ( 2,836 )

Other comprehensive income (loss) — — — — ( 223 ) — ( 223 )

Other — — 28 — — — 28

Issuance of common stock, net — — 7 — — — 7

Conversion of Convertible Notes — — 2 — — — 2

Purchases and issuances under the Stock Swap Program — — 105 — — ( 95 ) 10

Share-based compensation and other — — 28 — — — 28

At August 31, 2021 $ 11 $ 361 $ 15,146 $ 9,194 $ ( 1,349 ) $ ( 8,500 ) $ 14,863

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

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

Net income (loss) — — — ( 770 ) — — ( 770 )

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Issuances of common stock, net 1 — 1,148 — — — 1,149

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

Issuance of treasury shares for vested share-based awards — — — ( 12 ) — 12 —

Share-based compensation and other — — 22 — — — 22

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

Six Months Ended

At August 31, 2022 $ 12 $ 361 $ 16,626 $ 1,868 $ ( 2,024 ) $ ( 8,464 ) $ 8,379

Nine Months Ended

stock Ordinary

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Issuance of common stock, net — — 1,003 — — — 1,003

Other — — 60 — — — 60

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

Conversion of Convertible Notes — — 2 — — — 2

Purchases and issuances under the Stock Swap Program — — 105 — — ( 95 ) 10

Share-based compensation and other — — 88 — — — 88

At August 31, 2021 $ 11 $ 361 $ 15,146 $ 9,194 $ ( 1,349 ) $ ( 8,500 ) $ 14,863

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

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Share-based compensation and other — — 67 ( 1 ) — — 66

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

At August 31, 2022 $ 12 $ 361 $ 16,626 $ 1,868 $ ( 2,024 ) $ ( 8,464 ) $ 8,379

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

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Liquidity and Management’s Plans

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

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.

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.

In the face of the global impact of COVID-19, we paused our guest cruise operations in mid-March 2020 and began resuming guest cruise operations in 2021.

As of August 31, 2022, 93 % of our capacity was serving guests.

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

The extent of the collective impact of such items is uncertain and will depend on future developments, including the length of time it takes to return the company to profitability.

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

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

• Continued 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

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

• Continued resumption of guest cruise operations

• Expected increases in revenue in 2023 on a per passenger basis compared to 2019, particularly with the relaxation of COVID-19 related protocols aligning towards land-based vacation alternatives

• Expected improvement in occupancy on a year-over-year basis returning to historical levels during 2023

• Expected moderation of fuel prices continuing into the fourth quarter of 2022 and 2023

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

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

We cannot make assurances that our assumptions used to estimate our liquidity requirements may not change because we have never previously experienced a complete cessation and subsequent 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 COVID-19 global pandemic and its ongoing effects, inflation and higher fuel prices are uncertain.

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

In addition, the effects of the COVID-19 global pandemic, inflation, higher fuel prices and higher interest rates are uncertain.

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

We took 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.

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

We expect to continue to address maturities well in advance and obtain relevant financial covenant amendments or waivers, as needed.

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

Basis of Presentation

The Consolidated Statements of Income (Loss), the Consolidated Statements of Comprehensive Income (Loss) and the Consolidated Statements of Shareholders’ Equity for the three and 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.

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

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

Securities and Exchange Commission on January 27, 2022.

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

Use of Estimates and Risks and Uncertainty

The preparation of our interim consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S.

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

The full extent to which the effects of COVID-19 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.

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.

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

We have made reasonable estimates and judgments of such items within our financial statements and there may be changes to those estimates in future periods.

Accounting Pronouncements

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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.

As of August 31, 2022, approximately $ 8.4 billion of our outstanding indebtedness bears interest at floating rates referenced to U.S.

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

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The guidance also requires entities to use the if-converted method for all convertible instruments in the diluted earnings per share calculation and include the effect of share settlement for instruments that may be settled in cash or shares, except for certain liability-classified share-based payment awards.

This guidance is required to be adopted by us in the first quarter of 2023 and must be applied using either a modified or full retrospective approach.

We are currently evaluating the impact this guidance will have on our consolidated financial statements.

We will adopt this guidance in the first quarter of 2023 using the modified retrospective approach.

We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

NOTE 2 – Revenue and Expense Recognition

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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.

For the three and nine months ended August 31, fees, taxes, and charges included in commissions, transportation and other costs were $ 141 million and $ 305 million in 2022 and were $ 16 million and $ 28 million in 2021.

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

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

We have paid refunds of customer deposits with respect to a portion of cancelled cruises.

The amount of any future cash refunds may depend on future cruise cancellations and guest rebookings.

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 $ 5.1 billion as of May 31, 2022 and $ 3.5 billion as of November 30, 2021 .

We had total customer deposits of $ 4.8 billion as of August 31, 2022 and $ 3.5 billion as of November 30, 2021 .

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

During the 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.

During the nine months ended August 31, 2022 and 2021, we recognized revenues of $ 1.7 billion and an immaterial amount related to our customer deposits as of November 30, 2021 and 2020.

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

Contract Receivables

Trade and Other Receivables

Although we generally require full payment from our customers prior to or concurrently with their cruise, we grant credit terms to a relatively small portion of our revenue source.

We also have receivables from credit card merchants for cruise ticket purchases and onboard revenue.

We have receivables from credit card merchants and travel agents for cruise ticket purchases and onboard revenue.

These receivables are included within trade and other receivables, net.

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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 .

We had contract assets of $ 191 million as of August 31, 2022 and $ 55 million as of November 30, 2021 .

NOTE 3 – Debt

August 31, November 30,

(in millions) Maturity Rate (a) (b) 2022 2021

Notes Feb 2026 10.5 % $ 775 $ 775

EUR Notes Feb 2026 10.1 % 425 481

Notes Jun 2027 7.9 % 192 192

Notes Aug 2027 9.9 % 900 900

Notes Aug 2028 4.0 % 2,406 2,406

EUR fixed rate Nov 2022 5.5 % - 6.2 %

EUR floating rate Nov 2022 - Jun 2025 EURIBOR + 2.7 % - 3.8 %

Floating rate Jun 2025 - Oct 2028 LIBOR + 3.0 % - 3.3 %

Total Secured Debt 9,704 9,939

Unsecured Debt

Facility (c) LIBOR + 0.7 %

EUR Notes Nov 2022 1.9 % 550 622

Convertible Notes Apr 2023 5.8 % 183 522

Notes Oct 2023 7.2 % 125 125

Convertible Notes Oct 2024 5.8 % 339 —

Notes Mar 2026 7.6 % 1,450 1,450

EUR Notes Mar 2026 7.6 % 500 566

Notes Mar 2027 5.8 % 3,500 3,500

Notes Jan 2028 6.7 % 200 200

Notes May 2029 6.0 % 2,000 2,000

EUR Notes Oct 2029 1.0 % 600 679

Notes Jun 2030 10.5 % 1,000 —

Floating rate Feb 2023 - Sep 2024 LIBOR + 3.8 % - 4.5 %

GBP floating rate Feb 2025 SONIA + 0.9 % (d)

EUR floating rate Dec 2021 - Mar 2026 EURIBOR + 1.8 % - 4.8 %

Export Credit Facilities

Floating rate Feb 2022 - Dec 2031 LIBOR + 0.5 % - 1.5 %

Fixed rate Aug 2027 - Dec 2032 2.4 % - 3.4 %

EUR floating rate Feb 2022 - Dec 2033 EURIBOR + 0.2 % - 1.6 %

EUR fixed rate Feb 2031 - Jan 2034 1.1 % - 1.6 %

Total Unsecured Debt 25,104 24,031

Total Debt 34,808 33,970

unamortized debt issuance costs and discounts ( 737 ) ( 744 )

Total Debt, net of unamortized debt issuance costs and discounts 34,071 33,226

short-term borrowings ( 2,675 ) ( 2,790 )

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”).

current portion of long-term debt ( 2,877 ) ( 1,927 )

Long-Term Debt $ 28,518 $ 28,509

(a) Substantially all of our variable debt has a 0.0 % to 0.75 % floor.

(b) The above debt table does not include the impact of our interest rate swaps and as of November 30, 2021, it also excludes the impact of our foreign currency swaps.

As of August 31, 2022, we had no foreign currency swaps.

The interest rates on some of our debt, including our Revolving Facility, fluctuate based on the applicable rating of senior unsecured long-term securities of Carnival Corporation or Carnival plc.

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

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

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

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

(d) As of August 31, 2022 the interest rate for the GBP unsecured loan was linked to SONIA and subject to a credit adjustment spread ranging from 0.03 % to 0.28 %.

As of November 30, 2021, this loan was referenced to GBP LIBOR.

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

is the primary obligor, and which is guaranteed by Carnival Corporation and Carnival plc.

Short-Term Borrowings

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

Export Credit Facility Borrowings

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

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

As of August 31, 2022, the net book value of the vessels subject to negative pledges was $ 13.0 billion.

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

2030 Senior Unsecured Notes

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

Convertible Notes

In 2020, we issued $ 2.0 billion aggregate principal amount of 5.75 % convertible senior notes due 2023 (the “2023 Convertible Notes”).

The 2023 Convertible Notes mature on April 1, 2023, unless earlier repurchased or redeemed by us or earlier converted in accordance with their terms prior to the maturity date.

Since April 2020, we repurchased, exchanged and converted a portion of the 2023 Convertible Notes which resulted in a decrease of the principal amount of the 2023 Convertible Notes to $ 0.2 billion.

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

The 2024 Convertible Notes mature on

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

The Convertible Notes are convertible by holders, subject to the conditions described within the respective indentures that govern the Convertible Notes, into cash, shares of Carnival Corporation common stock, or a combination thereof, at our election.

The Convertible Notes have an initial conversion rate of 100 shares of Carnival Corporation common stock per $ 1,000 principal amount of the Convertible Notes, equivalent to an initial conversion price of $ 10 per share of common stock.

The initial conversion price of the Convertible Notes is subject to certain anti-dilutive adjustments and may also increase if such Convertible Notes are converted in connection with a tax redemption or certain corporate events.

The 2024 Convertible Notes were convertible from the date of issuance of the 2024 Convertible Notes until August 31, 2022, and thereafter may become convertible if certain conditions are met.

As of August 31, 2022, no condition allowing holders of the 2023 Convertible Notes or the 2024 Convertible Notes to convert had been met and therefore the Convertible Notes are not convertible.

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

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

We account for the Convertible Notes as separate liability and equity components.

We determined the car rying amount of the liability component as the present value of its cash flows.

The carrying amount of the equity component representing the conversion option was $ 286 million on the date of issuance of the 2023 Convertible Notes and was calculated by deducting the carrying value of the liability component from the initial proceeds from the 2023 Convertible Notes.

The carrying amount of the equity component was reduced to zero in conjunction with the partial repurchase of Convertible Notes in August 2020 because at the time of repurchase, the fair value of the equity component for the portion of the Convertible Notes that was repurchased, exceeded the total amount of the equity component recorded at the time the Convertible Notes were issued.

The fair value of the conversion option remained unchanged after the exchange of the portion of the 2023 Convertible Notes for the 2024 Convertible Notes and, as a result, there was no adjustment to the carrying amount of the equity component.

The debt discount, which represented the excess of the principal amount of the 2023 Convertible Notes over the carrying amount of the liability component on the date of issuance of the 2023 Convertible Notes, was capitalized and amortized to interest expense under the effective interest rate method over the term of the 2023 Convertible Notes.

Following the exchange of the portion of the 2023 Convertible Notes for the 2024 Convertible Notes, the remaining unamortized discount was allocated between the 2023 Convertible Notes and the 2024 Convertible Notes and is amortized to interest expense over each respective term using the effective interest rate method.

The net carrying value of the liability component of the Convertible Notes was as follows:

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

Principal $ 522 $ 522

Unamortized debt discount ( 22 ) ( 45 )

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

Covenant Compliance

As of 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

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

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

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

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

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

During August and September 2022, we entered into letter agreements to waive compliance with the Interest Coverage Covenant under our Revolving Facility and $ 0.7 billion of $ 11.4 billion of our unsecured loans and export credit facilities, which contain the covenant through February 29, 2024.

We will be required to comply beginning with the next testing date of May 31, 2024.

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

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

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

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

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

(in millions)

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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 May 31, 2022.

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

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

NOTE 4 – Contingencies and Commitments

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Unfavorable resolutions could involve substantial monetary damages.

In addition, in matters for which conduct remedies are sought, unfavorable resolutions could include an injunction or other order prohibiting us from selling one or more products at all or in particular ways, precluding particular business practices or requiring other remedies.

In addition, in matters for which conduct remedies are sought, unfavorable resolutions could include an injunction or other order prohibiting us from selling one or more

products at all or in particular ways, precluding particular business practices or requiring other remedies.

An unfavorable outcome might result in a material adverse impact on our business, results of operations, financial position or liquidity.

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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 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.

On August 31, 2022, the court determined that the trebling provision of the Helms-Burton statute applies to damages and interest.

Accordingly, we have adjusted our estimated liability for this matter as of August 31, 2022.

The court held a status conference on September 22, 2022, at which time it was determined that a jury trial is no longer necessary.

All remaining issues, including calculation of damages and certain pending constitutional matters, will be addressed via briefing to the court.

The briefing schedule is set to have all briefing completed on December 2, 2022.

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

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Both motions for summary judgment are fully briefed.

On July 28, 2022, the court adopted the Magistrate Judge’s report and recommendation granting our opening claim construction brief and denying DeCurtis’s motion for summary judgment regarding the invalidity of various patent claims.

The court has set the trial date for February 27, 2023.

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

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

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.

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

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

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

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A smaller number of actions include wrongful death claims.

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.

As of August 31, 2022, 71 of these individual actions in the U.S.

have now been dismissed or settled for immaterial amounts and two remain.

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

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

federal courts and in the Federal Court of Australia.

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

As of 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.

As of August 31, 2022, nine of these class actions have either been settled individually for immaterial amounts or had their class allegations dismissed by the courts and only the Australian matter remains.

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

As previously disclosed, on December 15, 2020, a consolidated class action with 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, alleging violations of 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.

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.

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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, 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 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.

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 .

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

In addition, as previously disclosed, we finalized a settlement with the State Attorneys General from 46 states in connection with the same cybersecurity events, pursuant to which we have paid an amount that did not have a material impact on our consolidated financial statements.

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

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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 impact on our consolidated financial statements.

On March 14, 2022, the U.S.

Department of Justice and the U.S.

Environmental Protection Agency notified us of potential civil penalties and injunctive relief for alleged Clean Water Act violations by owned and operated vessels covered by the 2013 Vessel General Permit.

We are working with these agencies to reach a resolution of this matter.

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

Other Contingent Obligations

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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, 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.

As of August 31, 2022 and November 30, 2021 , we had $ 1.6 billion and $ 1.1 billion in reserve funds related to our customer deposits provided to satisfy these requirements which are included within other assets.

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

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

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

Ship Commitments

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

As of August 31, 2022, 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

May 31, 2022 November 30, 2021

August 31, 2022 November 30, 2021

Value Fair Value Carrying

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

May 31, 2022 November 30, 2021

August 31, 2022 November 30, 2021

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

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Valuation of Goodwill and Trademarks

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.

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.

As of July 31, 2022, we performed our annual goodwill and trademark impairment reviews and determined there was no impairment for goodwill or trademarks.

As of August 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 as of August 31, 2022 and November 30, 2021.

(in millions) NAA

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Exchange movements — ( 30 ) ( 30 )

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

August 31, 2022 $ 927 $ 218 $ 1,145

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 as of February 28, 2022.

As a result of the continued effects 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, which we subsequently sold, had a net carrying value that exceeded its estimated discounted future cash flows as of February 28, 2022.

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.

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We believe that we have made reasonable estimates and judgments as part of our assessment.

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

A change in principal assumptions, including those regarding ship deployment given Costa Cruises’ Asia markets, particularly China, remain closed to cruising, may result in a need to perform additional impairment reviews and a need to recognize additional impairment charges.

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

Three Months Ended May 31, Six Months Ended

Three Months Ended August 31, Nine Months Ended

(in millions) 2022 2021 2022 2021

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Total ship impairments $ — $ 475 $ 8 $ 524

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

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

Derivative Instruments and Hedging Activities

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

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

Derivative assets

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Total derivative liabilities $ 1 $ 13

(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.

(a) At August 31, 2022, we had no cross-currency swaps.

At November 30, 2021, we had a cross currency swap totaling $ 201 million that was designated as a hedge of our net investment in foreign operations with a euro-denominated functional currency.

(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 $ 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.

These interest rate swap agreements effectively changed $ 108 million at August 31, 2022 and $ 160 million at November 30, 2021 of EURIBOR-based floating rate euro debt to fixed rate euro debt.

At August 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, when applicable.

August 31, 2022

(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

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

Three Months Ended May 31, Six Months Ended

Three Months Ended August 31, Nine Months Ended

(in millions) 2022 2021 2022 2021

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Cross currency swaps – net investment hedges - included component

$ 40 $ — $ 72 $ —

Cross currency swaps – net investment hedges - excluded component

$ ( 7 ) $ — $ ( 26 ) $ —

Interest rate swaps - cash flow hedges $ 1 $ 1 $ 10 $ 3

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Cross currency swaps – Interest expense, net of capitalized interest

$ 2 $ — $ 5 $ —

The amount of estimated cash flow hedges’ unrealized gains and losses that are expected to be reclassified to earnings in the next twelve months is not material.

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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 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.

As of August 31, 2022, we have designated $ 410 million of our sterling-denominated debt as non-derivative hedges of our net investments in foreign operations.

For the three and nine months ended August 31, 2022, we recognized $ 32 million and $ 57 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, which provides an economic offset for our operations with euro functional currency.

Newbuild Currency Risks

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

At May 31, 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.

At August 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 $ 5.2 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.

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• 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 May 31, 2022, our exposures under derivative instruments were not material.

At August 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.

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

Three Months Ended May 31,

Three Months Ended August 31,

(in millions) Revenues Operating costs and

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$ 546 $ 1,616 $ 425 $ 562 $ ( 2,057 )

Six Months Ended May 31,

Nine Months Ended August 31,

(in millions) Revenues Operating costs and

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

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

(in millions) Three Months Ended August 31, 2022 Nine Months Ended August 31, 2022

North America $ 2,753 $ 5,491

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$ 4,305 $ 8,329

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.

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

NOTE 7 – Earnings Per Share

Three Months Ended

May 31, Six Months Ended

August 31, Nine Months Ended

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

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Three Months Ended

May 31, Six Months Ended

August 31, Nine Months Ended

(in millions) 2022 2021 2022 2021

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NOTE 8 – Supplemental Cash Flow Information

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

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

Cash and cash equivalents (Consolidated Balance Sheets) $ 7,071 $ 8,939

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Total cash, cash equivalents and restricted cash (Consolidated Statements of Cash Flows) $ 7,107 $ 8,976

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.

For the nine months ended August 31, 2022 and 2021, we did not have borrowings or repayments of commercial paper with original maturities greater than three months.

NOTE 9 – Property and Equipment

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.

During 2022, we sold one NAA segment ship and one EA segment ship and entered into an agreement to sell one NAA segment ship, which collectively represents 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.

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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 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.

During the three months ended August 31, 2022, there were no sales or repurchases under the Stock Swap Program.

During the nine months ended August 31, 2022, we sold 5.2 million of Carnival Corporation common stock and repurchased the same amount of Carnival plc ordinary shares, resulting in net proceeds of $ 8 million, which were used for general corporate purposes.

During the three and nine months ended August 31, 2021, under the Stock Swap Program, we sold 4.6 million shares of Carnival Corporation common stock and repurchased the same amount of Carnival plc ordinary shares resulting in net proceeds of $ 10 million, which were used for general corporate purposes.

Outside of public equity offerings, during the three months ended August 31, 2022, there were no sales of Carnival Corporation common stock.

In addition, outside of public equity offerings, during the nine months ended August 31, 2022, we sold 1.6 million shares of Carnival Corporation common stock at an average price per share of $ 19.27 , resulting in net proceeds of $ 30 million.

Public Equity Offerings

During the three months ended August 31, 2022, we completed a public equity offering of 117.5 million shares of Carnival Corporation common stock at a price per share of $ 9.95 , resulting in net proceeds of $ 1.2 billion.

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