What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-03-29 compared with 2022-09-30 · 86 added, 123 removed, 129 unchanged (62% of the section changed)

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Forward-looking statements include those statements that relate to our outlook and financial position including, but not limited to, statements regarding:

• Goodwill, ship and trademark fair values

• Adjusted net income (loss)

• Booking levels

• Liquidity and credit ratings

• Adjusted EBITDA

• Adjusted earnings per share

• Interest, tax and fuel expenses

• Return to guest cruise operations

• Adjusted free cash flow

• Currency exchange rates

• Impact of the COVID-19 coronavirus global pandemic on our financial condition and results of operations

• Net per diems

• Goodwill, ship and trademark fair values

• Liquidity and credit ratings

• Adjusted cruise costs per ALBD

• Estimates of ship depreciable lives and residual values

• Adjusted cruise costs excluding fuel per ALBD

Because forward-looking statements involve risks and uncertainties, there are many factors that could cause our actual results, performance or achievements to differ materially from those expressed or implied by our forward-looking statements.

This note contains important cautionary statements of the known factors that we consider could materially affect the accuracy of our forward-looking statements and adversely affect our business, results of operations and financial position.

Additionally, many of these risks and uncertainties are currently, and in the future may continue to be, amplified by COVID-19.

It is not possible to predict or identify all such risks.

Additionally, many of these risks and uncertainties are currently, and in the future may continue to be, amplified by our substantial debt balance as a result of the pause of our guest cruise operations.

There may be additional risks that we consider immaterial or which are unknown.

These factors include, but are not limited to, the following:

• COVID-19 has had, and is expected to continue to have, a significant impact on our financial condition and operations.

The current, and uncertain future, impact of COVID-19, including its effect on the ability or desire of people to travel (including on cruises), is expected to continue to impact our results, operations, outlooks, plans, goals, reputation, litigation, cash flows, liquidity, and stock price.

• Events and conditions around the world, including war and other military actions, such as the current invasion of Ukraine, inflation, higher fuel prices, higher interest rates and other general concerns impacting the ability or desire of people to travel, have led, and may in the future lead, to a decline in demand for cruises, impacting our operating costs and profitability.

• Incidents concerning our ships, guests or the cruise industry have in the past and may, in the future, impact the satisfaction of our guests and crew and lead to reputational damage.

• Changes in and non-compliance with laws and regulations under which we operate, such as those relating to health, environment, safety and security, data privacy and protection, anti-corruption, economic sanctions, trade protection and tax have in the past and may, in the future, lead to litigation, enforcement actions, fines, penalties and reputational damage.

• Events and conditions around the world, including war and other military actions, such as the invasion of Ukraine, inflation, higher fuel prices, higher interest rates and other general concerns impacting the ability or desire of people to travel have led, and may in the future lead, to a decline in demand for cruises, impacting our operating costs and profitability.

• Pandemics have in the past and may in the future have a significant negative impact on our financial condition and operations.

• Incidents concerning our ships, guests or the cruise industry have in the past and may, in the future, negatively impact the satisfaction of our guests and crew and lead to reputational damage.

• Changes in and non-compliance with laws and regulations under which we operate, such as those relating to health, environment, safety and security, data privacy and protection, anti-corruption, economic sanctions, trade protection, labor and employment, and tax have in the past and may, in the future, lead to litigation, enforcement actions, fines, penalties and reputational damage.

• Factors associated with climate change, including evolving and increasing regulations, increasing global concern about climate change and the shift in climate conscious consumerism and stakeholder scrutiny, and increasing frequency and/or severity of adverse weather conditions could adversely affect our business.

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• Breaches in data security and lapses in data privacy as well as disruptions and other damages to our principal offices, information technology operations and system networks and failure to keep pace with developments in technology may adversely impact our business operations, the satisfaction of our guests and crew and may lead to reputational damage.

• The loss of key employees, our inability to recruit or retain qualified shoreside and shipboard employees and increased labor costs could have an adverse effect on our business and results of operations.

• The loss of key team members, our inability to recruit or retain qualified shoreside and shipboard team members and increased labor costs could have an adverse effect on our business and results of operations.

• Increases in fuel prices, changes in the types of fuel consumed and availability of fuel supply may adversely impact our scheduled itineraries and costs.

• We rely on supply chain vendors who are integral to the operations of our businesses.

These vendors and service providers are also affected by COVID-19 and may be unable to deliver on their commitments which could impact our business.

These vendors and service providers are also affected by COVID-19 and may be unable to deliver on their commitments which could negatively impact our business.

• Fluctuations in foreign currency exchange rates may adversely impact our financial results.

• Overcapacity and competition in the cruise and land-based vacation industry may lead to a decline in our cruise sales, pricing and destination options.

• Overcapacity and competition in the cruise and land-based vacation industry may negatively impact our cruise sales, pricing and destination options.

• Inability to implement our shipbuilding programs and ship repairs, maintenance and refurbishments may adversely impact our business operations and the satisfaction of our guests.

• Failure to successfully implement our business strategy following our resumption of guest cruise operations would negatively impact the occupancy levels and pricing of our cruises and could have a material adverse effect on our business.

We require a significant amount of cash to service our debt and sustain our operations.

Our ability to generate cash depends on many factors, including those beyond our control, and we may not be able to generate cash required to service our debt and sustain our operations.

The ordering of the risk factors set forth above is not intended to reflect our indication of priority or likelihood.

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Forward-looking and other statements in this document may also address our sustainability progress, plans and goals (including climate change and environmental-related matters).

In addition, historical, current and forward-looking sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future.

In addition, historical, current and forward-looking sustainability- and climate-related statements may be based on standards and tools for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions and predictions that are subject to change in the future and may not be generally shared.

New Accounting Pronouncements

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Our passenger ticket revenues are seasonal.

Historically, demand for cruises has been greatest during our third quarter, which includes the Northern Hemisphere summer months.

Demand for cruises has been greatest during our third quarter, which includes the Northern Hemisphere summer months.

This higher demand during the third quarter results in higher ticket prices and occupancy levels and, accordingly, the largest share of our operating income is typically earned during this period.

This historical trend was disrupted in 2020 by the pause and in 2021 by the ongoing resumption of guest cruise operations.

The seasonality of our results also increases due to ships being taken out-of-service for maintenance, which we schedule during non-peak demand periods.

In addition, substantially all of Holland America Princess Alaska Tours’ revenue and net income (loss) is generated from May through September in conjunction with Alaska’s cruise season.

Known Trends and Uncertainties

• We believe the increased cost of fuel, liquefied natural gas and other related costs are reasonably likely to continue to impact our profitability in both the short and long-ter m.

• We expect inflation, higher interest rates and supply chain challenges to continue to weigh on our costs, and they are reasonably likely to continue to impact our profitability.

• We believe the increasing global focus on climate change, including the reduction of carbon emissions and new and evolving regulatory requirements, is reasonably likely to materially impact our future costs, capital expenditures and revenues and/or the relationship between them.

• We believe the increased cost of fuel and other related costs are reasonably likely to continue to impact our profitability in both the short and long-ter m.

• We believe inflation and higher interest rates are reasonably likely to continue to impact our profitability.

• We believe the increasing global focus on climate change, including the reduction of carbon emissions and new and evolving regulatory requirements, is reasonably likely to have a material negative impact on our future financial results.

The full impact of climate change to our business is not yet known.

• In addition, we are experiencing some challenges with onboard staffing which have resulted in occupancy constraints on certain voyages and are reasonably likely to impact our profitability in the short-term.

• We expect a net loss for the fourth quarter of 2022 and continue to expect a net loss for the full year 2022.

Statistical Information

Three Months Ended

August 31, Nine Months Ended

2022 2021 2022 2021

Passenger Cruise Days (“PCDs”) (in thousands) (a) 17,700 2,053 36,363 2,219

Available Lower Berth Days (“ALBDs”) (in thousands) (b) 21,015 3,788 51,004 4,405

Passenger Cruise Days (“PCDs”) (in millions) (a)

Available Lower Berth Days (“ALBDs”) (in millions) (b)

Occupancy percentage (c) 91 % 54 %

Passengers carried (in thousands) 2,571 340 5,233 372

Fuel consumption in metric tons (in thousands) 701 344 1,899 852

Fuel consumption in metric tons per thousand ALBDs 33 (d) 37 (d)

Passengers carried (in millions)

Fuel consumption in metric tons (in millions)

Fuel consumption in metric tons per thousand ALBDs 33.4 42.5

Fuel cost per metric ton consumed $ 730 $ 648

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GBP $ 1.22 $ 1.35

The resumption of guest cruise operations has impacted the comparability of all aspects of our business.

Notes to Statistical Information

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ALBDs assume that each cabin we offer for sale accommodates two passengers and is computed by multiplying passenger capacity by revenue-producing ship operating days in the period.

(c) Occupancy, in accordance with cruise industry practice, is calculated using a numerator of PCDs and denominator of ALBDs, which assumes two passengers per cabin even though some cabins can accommodate three or more passengers.

(c) Occupancy, in accordance with cruise industry practice, is calculated using a numerator of PCDs and a denominator of ALBDs, which assumes two passengers per cabin even though some cabins can accommodate three or more passengers.

Percentages in excess of 100% indicate that on average more than two passengers occupied some cabins.

(d) Fuel consumption in metric tons per thousand ALBDs for 2021 is not meaningful.

Results of Operations

Three Months Ended August 31, Nine Months Ended

(in millions) 2022 2021 Change 2022 2021 Change

Three Months Ended February 28,

(in millions) 2023 2022 Change

Passenger ticket $ 2,870 $ 873 $ 1,997

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Other operating 743 557 187

3,379 1,616 1,763 8,092 2,832 5,260

Cruise and tour operating expenses 3,311 2,030 1,280

Selling and administrative 712 530 182

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Interest expense, net of capitalized interest (539) (368) (171)

Gains (losses) on debt extinguishment, net — (376) 376 — (372) 372

Other income (expense), net (30) (32) 2

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Income (Loss) Before Income Taxes $ (686) $ (1,888) $ 1,203

Three Months Ended August 31, Nine Months Ended

(in millions) 2022 2021 Change 2022 2021 Change

Three Months Ended February 28,

(in millions) 2023 2022 Change

Passenger ticket $ 1,892 $ 586 $ 1,306

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Operating Income (Loss) $ 86 $ (840) $ 926

Three Months Ended August 31, Nine Months Ended

(in millions) 2022 2021 Change 2022 2021 Change

Three Months Ended February 28,

(in millions) 2023 2022 Change

Passenger ticket $ 992 $ 341 $ 650

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Operating Income (Loss) $ (166) $ (598) $ 431

We paused our guest cruise operations in March 2020.

We began our resumption of guest cruise operations in 2021 and continued into 2022.

As of August 31, 2022, 93% of our capacity was serving guests, compared to 35% as of August 31, 2021.

Our NAA segment had 95% of its capacity serving guests as of August 31, 2022, compared to 31% as of August 31, 2021.

Our EA segment had 92% of its capacity serving guests as of August 31, 2022 , compared to 43% as of August 31, 2021.

We expect eight of our nine brands will have their entire fleet serving guests by the end of the fourth quarter of 2022.

Given Costa Cruises’ significant presence in Asia, particularly China, which remains closed to cruising, the brand continues to evaluate deployment options and fleet optimization alternatives beyond the previously announced transfers of Costa Luminosa to Carnival Cruise Line as well as Costa Venezia and Costa Firenze to the COSTA ® by CARNIVAL ® concept.

The effects of the COVID-19 global pandemic, inflation, higher fuel prices and higher interest rates are collectively having a material negative impact on all aspects of our business, including our results of operations, liquidity and financial position.

The full extent of these impacts are uncertain.

Three Months Ended August 31, 2022 (“2022”) Compared to Three Months Ended August 31, 2021 (“2021”)

The effects of the pause in guest cruise operations in March 2020 and subsequent resumption of our guest cruise operations, inflation, higher fuel prices, higher interest rates and fluctuations in foreign currency rates are collectively having a material negative impact on all aspects of our business, including our results of operations, liquidity and financial position.

We have a substantial debt balance and require a significant amount of cash to service our debt and sustain our operations.

Our ability to generate cash will be affected by our ability to successfully implement our business strategy, which includes increasing our occupancy levels and pricing of our cruises, as well as general macroeconomic, financial, geopolitical, competitive, regulatory and other factors beyond our control.

The full extent of these impacts is uncertain and may be amplified by our substantial debt balance.

Three Months Ended February 28, 2023 (“2023”) Compared to Three Months Ended February 28, 2022 (“2022”)

Cruise passenger ticket revenues made up 65% of our total revenues in 2023 while onboard and other revenues made up 35%.

Revenues in 2022 increased by $3.8 billion as compared to 2021 due to the resumption of guest cruise operations and the significant increase of ships in service.

Revenues in 2023 increased by $2.8 billion to $4.4 billion from $1.6 billion in 2022 due to the ongoing resumption of guest cruise operations, including the significant increase of ships in service and higher occupancy.

As of February 28, 2023, 96 % of our capacity was serving guests, compared to 71% as of February 28, 2022.

ALBDs increased to 22.1 million in 2023 as compared to 13.3 million in 2022.

Occupancy in 2022 was 84% compared to 54% in 2021.

Occupancy for 2023 was 91% compared to 54% in 2022.

Cruise passenger ticket revenues made up 61% of our NAA segment’s total revenues in 2023 while onboard and other cruise revenues made up 39%.

NAA segment revenues in 2022 increased by $2.6 billion as compared to 2021 due to the resumption of guest cruise operations and the significant increase of ships in service.

NAA segment revenues in 2023 increased by $2.0 billion to $3.1 billion from $1.1 billion in 2022 due to the ongoing resumption of guest cruise operations, including the significant increase of ships in service and higher occupancy.

Our NAA segment’s full fleet was serving guests as of February 28, 2023, compared to 69% as of February 28, 2022.

ALBDs increased to 13.9 million in 2023 as compared to 8.7 million in 2022.

Occupancy in 2022 was 92% compared to 68% in 2021.

Cruise passenger ticket revenues made up 77% of our EA segment’s total revenues in 2022 while onboard and other cruise revenues made up 23%.

EA segment revenues in 2022 increased by $1.0 billion as compared to 2021 due to the resumption of guest cruise operations and the significant increase of ships in service.

Occupancy for 2023 was 98% compared to 59% in 2022.

Europe Segment

Cruise passenger ticket revenues made up 77% of our Europe segment’s total revenues in 2023 while onboard and other cruise revenues made up 23%.

Europe segment revenues in 2023 increased by $0.8 billion to $1.3 billion from $0.5 billion in 2022 due to the ongoing resumption of guest cruise operations, including the significant increase of ships in service and higher occupancy.

Our Europe segment had 93% of its capacity serving guests as of February 28, 2023 , compared to 73% as of February 28, 2022.

ALBDs increased to 8.2 million in 2023 as compared to 4.6 million in 2022.

Occupancy in 2022 was 73% compared to 47% in 2021.

Operating Costs and Expenses

Occupancy for 2023 was 80% compared to 45% in 2022.

Operating Cost and Expenses

Operating costs and expenses increased by $1.3 billion to $3.3 billion in 2023 from $2.0 billion in 2022.

These increases were driven by our resumption of guest cruise operations and restart related expenses, including the cost of returning ships to guest cruise operations and returning crew members to our ships, the cost of maintaining enhanced health and safety protocols, inflation and supply chain disruptions.

We anticipate that many of these costs and expenses will end in 2022.

These increases were driven by our resumption of guest cruise operations and an increase in ships in service.

Fuel costs increased by $170 million to $535 million in 2023 from $365 million in 2022.

This increase was caused by higher fuel consumption of 357 thousand metric tons, due to the resumption of guest cruise operations, and an increase in fuel prices of $421 per metric ton consumed in 2022 compared to 2021.

There were no ship impairment charges recognized in 2022 and $475 million of ship impairment charges recognized in 2021.

$110 million of this increase was driven by higher fuel consumption of 0.2 million metric tons, due to the resumption of guest cruise operations, and $60 million was driven by a combination of increases in fuel prices and changes in fuel mix of $81 per metric ton consumed in 2023 compared to 2022.

Selling and administrative expenses increased by $182 million to $712 million in 2023 from $530 million in 2022.

This increase was caused by higher administrative expenses and increased advertising and promotional spend incurred as part of our resumption of guest cruise operations.

The drivers in changes in costs and expenses for our NAA and EA segments are the same as those described for our consolidated results.

Nonoperating Income (Expense)

Gains (losses) on debt extinguishment, net decreased to $0 million in 2022 from $376 million in 2021.

Nine Months Ended August 31, 2022 (“2022”) Compared to Nine Months Ended August 31, 2021 (“2021”)

Cruise passenger ticket revenues made up 57% of our total revenues in 2022 while onboard and other revenues made up 43%.

Revenues in 2022 increased by $7.7 billion as compared to 2021 due to the resumption of guest cruise operations and the significant increase of ships in service.

ALBDs increased to 51.0 million in 2022 as compared to 4.4 million in 2021.

Occupancy in 2022 was 71% compared to 50% in 2021.

Cruise passenger ticket revenues made up 56% of our NAA segment’s total revenues in 2022 while onboard and other cruise revenues made up 44%.

NAA segment revenues in 2022 increased by $5.4 billion as compared to 2021 due to the resumption of guest cruise operations and the significant increase of ships in service.

ALBDs increased to 31.4 million in 2022 as compared to 1.4 million in 2021.

Occupancy in 2022 was 78% compared to 68% in 2021.

Cruise passenger ticket revenues made up 76% of our EA segment’s total revenues in 2022 while onboard and other cruise revenues made up 24%.

EA segment revenues in 2022 increased by $2.1 billion as compared to 2021 due to the resumption of guest cruise operations and the significant increase of ships in service.

ALBDs increased to 19.6 million in 2022 as compared to 3.0 million in 2021.

Occupancy in 2022 was 60% compared to 43% in 2021.

Operating Costs and Expenses

Operating costs and expenses increased by $5.3 billion to $8.1 billion in 2022 from $2.8 billion in 2021.

These increases were driven by our resumption of guest cruise operations and restart related expenses, including the cost of returning ships to guest cruise operations and returning crew members to our ships, higher number of dry-dock days, the cost of maintaining enhanced health and safety protocols, inflation and supply chain disruptions.

We anticipate that many of these costs and expenses will end in 2022.

Fuel costs increased by $1.2 billion to $1.6 billion in 2022 from $0.4 billion in 2021.

The increase was caused by higher fuel consumption of 1.0 million metric tons, due to the resumption of guest cruise operations, and an increase in fuel prices of $364 per metric ton consumed in 2022 compared to 2021.

We recognized a ship impairment charge of $8 million in 2022 and ship impairment charges of $524 million in 2021.

Selling and administrative expenses increased by $0.5 billion to $1.8 billion for 2022 from $1.3 billion in 2021.

The increase was caused by higher administrative expenses and increased advertising and promotional spend incurred as part of our resumption of guest cruise operations.

The drivers in changes in costs and expenses for our NAA and EA segments are the same as those described for our consolidated results.

The increase was caused by increased administrative expenses and advertising costs incurred as part of our resumption of guest cruise operations.

The drivers in changes in costs and expenses for our NAA and Europe segments are the same as those described for our consolidated results.

Nonoperating Income (Expense)

Interest expense, net of capitalized interest, decreased by $0.1 billion to $1.2 billion in 2022 from $1.3 billion in 2021.

The decrease was caused by a lower average interest rate as a result of completed refinancing efforts and was partially offset by a higher average debt balance in 2022 compared to 2021.

Gains (losses) on debt extinguishment, net decreased to $0 million in 2022 from $372 million in 2021.

Interest expense, net of capitalized interest, increased by $171 million to $539 million in 2023 from $368 million in 2022.

The increase was caused by a higher average interest rate and a higher average debt balance in 2023 compared to 2022.

Liquidity, Financial Condition and Capital Resources

As of August 31, 2022, we had $7.4 billion of liquidity including cash and borrowings available under our Revolving Facility.

During the remainder of 2022 and 2023 we expect to continue to address maturities well in advance and obtain relevant financial covenant amendments or waivers, as needed.

We had a working capital deficit of $4.5 billion as of August 31, 2022 compared to working capital deficit of $0.3 billion as of November 30, 2021.

The increase in working capital deficit was caused by a decrease in cash and cash equivalents, a decrease in short-term investments, an increase in customer deposits and an increase in current portion of long-term debt.

As of February 28, 2023, we had $8.1 billion of liquidity including cash and cash equivalents and borrowings available under our Revolving Facility.

We will continue to pursue various opportunities to refinance future debt maturities and/or to extend the maturity dates associated with our existing indebtedness and obtain relevant financial covenant amendments or waivers, if needed.

We had a working capital deficit of $3.9 billion as of February 28, 2023 compared to working capital deficit of $3.1 billion as of November 30, 2022.

The increase in working capital deficit was caused by an increase in customer deposits and an overall decrease in cash and cash equivalents and restricted cash.

We operate with a substantial working capital deficit.

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The cash received as advanced receipts can be used to fund operating expenses, pay down our debt, make long-term investments or any other use of cash.

Included within our working capital are $4.5 billion and $3.1 billion of customer deposits as of August 31, 2022 and November 30, 2021, respectively.

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.

Included within our working capital are $5.5 billion and $4.9 billion of customer deposits as of February 28, 2023 and November 30, 2022, respectively.

We have agreements with a number of credit card processors that transact customer deposits related to our cruise vacations.

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Operating Activities

Our business used $1.6 billion of net cash flows in operating activities during the nine months ended August 31, 2022, a decrease of $2.2 billion, compared to $3.7 billion of net cash flows used for the same period in 2021.

This was due to a decrease in the net loss and an increase in cash inflows from customer deposits during the nine months ended August 31, 2022 compared to the same period in 2021 and other working capital changes.

Our business provided $0.4 billion of net cash flows in operating activities during the three months ended February 28, 2023, an increase of $1.6 billion, compared to $1.2 billion used for the same period in 2022.

This was driven by a decrease in the net loss compared to the same period in 2022 and an increase in customer deposits.

Investing Activities

During the nine months ended August 31, 2022, net cash used in investing activities was $3.5 billion.

This was driven by the following:

During the three months ended February 28, 2023, net cash used in investing activities was $1.0 billion.

This was driven by:

• Capital expenditures of $0.8 billion for our ongoing new shipbuilding program

• Capital expenditures of $243 million for ship improvements and replacements, information technology and buildings and improvements

• Proceeds from sale of ships and other of $55 million

• Purchases of short-term investments of $315 million

• Proceeds from maturity of short-term investments of $515 million

During the nine months ended August 31, 2021, net cash used in investing activities was $3.5 billion.

This was driven by the following:

• Proceeds from sale of ships of $23 million

During the three months ended February 28, 2022, net cash used in investing activities was $3.0 billion.

This was driven by:

• Capital expenditures of $2.5 billion for our ongoing new shipbuilding program

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• Proceeds from sale of ships and other of $18 million

• Purchases of short-term investments of $2.7 billion

• Proceeds from maturity of short-term investments of $2.0 billion

• Purchases of short-term investments of $315 million

Financing Activities

During the nine months ended August 31, 2022, net cash provided by financing activities of $3.2 billion was caused by the following:

During the three months ended February 28, 2023, net cash provided by financing activities of $0.1 billion was caused by:

• Issuances of $0.8 billion of long-term debt

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• Payments of $40 million related to debt issuance costs

During the three months ended February 28, 2022, net cash provided by financing activities of $1.7 billion was caused by:

• Issuances of $2.3 billion of long-term debt

• Repayments of $503 million of long-term debt

• Payments of $85 million related to debt issuance costs

• Net repayments of short-term borrowings of $48 million

• Net proceeds of $1.2 billion from the public offering of Carnival Corporation common stock

• Purchases of $23 million of Carnival plc ordinary shares and issuances of $27 million of Carnival Corporation common stock under our Stock Swap Program

During the nine months ended August 31, 2021, net cash provided by financing activities of $4.9 billion was caused by the following:

• Issuances of $7.9 billion of long-term debt, including net proceeds of $3.4 billion from the issuance of the 2027 Senior Unsecured Notes, net proceeds of $2.4 billion from the issuance of the 2028 Senior Secured Notes, and net proceeds of $2.1 billion borrowed under export credit facilities to fund ship deliveries

• Repayments of $3.5 billion of long-term debt, including $2.0 billion repurchase of the 2023 Senior Secured Notes

• Premium payments of $286 million related to the repurchase of the 2023 Senior Secured Notes

• Net proceeds of $1.0 billion from Carnival Corporation common stock

• Purchases of $94 million of Carnival plc ordinary shares and issuances of $105 million of Carnival Corporation common stock under our Stock Swap Program

• Payments of $233 million related to debt issuance costs

Funding Sources

As of August 31, 2022, we had $7.4 billion of liquidity including cash and borrowings available under our Revolving Facility.

As of February 28, 2023, we had $8.1 billion of liquidity including $5.5 billion of cash and cash equivalents and $2.6 billion of borrowings available under our Revolving Facility, which matures in 2024.

In February 2023, Carnival Holdings II entered into the New Revolving Facility, which may be utilized beginning in August 2024, at which date it will replace our existing Revolving Facility.

Refer to Note 3 - “Debt” of the consolidated financial statements for additional discussion.

In addition, we had $3.2 billion of undrawn export credit facilities to fund ship deliveries planned through 2025.

We plan to use future cash flows from operations to fund our cash requirements including capital expenditures not funded by our export credit facilities.

We plan to use existing liquidity and future cash flows from operations to fund our cash requirements including capital expenditures not funded by our export credit facilities.

We seek to manage our credit risk exposures, including counterparty nonperformance associated with our cash and cash equivalents, and future financing facilities by conducting business with well-established financial institutions, and export credit agencies and diversifying our counterparties.

(in billions) 2023 2024 2025

Future export credit facilities at August 31, 2022

Future export credit facilities at February 28, 2023

$ 316 $ 2,165 $ 716

Our export credit facilities contain various financial covenants as described in Note 3 - “Debt”.

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

At February 28, 2023 , we were in compliance with the applicable covenants under our debt agreements.

Off-Balance Sheet Arrangements

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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 2. Management’s Discussion and Analysis