What changed in this filing

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Item 1. Financial Statements

2023-06-28 compared with 2023-03-29 · 180 added, 117 removed, 498 unchanged (37% 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

2023 2022 2023 2022

Passenger ticket $ 3,141 $ 1,285 $ 6,011 $ 2,158

Onboard and other 1,770 1,116 3,332 1,866

4,911 2,401 9,343 4,024

Operating Expenses

2 unchanged sentences

Payroll and related 601 533 1,183 1,038

Fuel 489 545 1,024 910

Food 325 191 636 327

Ship and other impairments — — — 8

3 unchanged sentences

Depreciation and amortization 597 572 1,179 1,126

4,791 3,874 9,394 6,988

Operating Income (Loss) 120 ( 1,473 ) ( 52 ) ( 2,964 )

2 unchanged sentences

Interest expense, net of capitalized interest ( 542 ) ( 370 ) ( 1,082 ) ( 738 )

Gain (loss) on debt extinguishment, net ( 31 ) — ( 31 ) —

Other income (expense), net ( 17 ) 6 ( 47 ) ( 26 )

10 unchanged sentences

(in millions)

Three Months Ended February 28,

Three Months Ended

May 31, Six Months Ended

2023 2022 2023 2022

Net Income (Loss) $ ( 407 ) $ ( 1,834 ) $ ( 1,100 ) $ ( 3,726 )

1 unchanged sentence

Change in foreign currency translation adjustment 102 ( 260 ) 99 ( 246 )

Other ( 33 ) 3 ( 19 ) 5

Other Comprehensive Income (Loss) 69 ( 257 ) 79 ( 241 )

48 unchanged sentences

(in millions)

Three Months Ended

Six Months Ended

OPERATING ACTIVITIES

3 unchanged sentences

Impairments — 8

(Gain) loss on debt extinguishment 31 —

(Income) loss from equity-method investments 27 ( 4 )

2 unchanged sentences

Noncash lease expense 72 68

Other, net 7 5

(Gain) loss on ship sales and other, net ( 9 ) 12

316 ( 2,376 )

2 unchanged sentences

Inventories ( 6 ) ( 79 )

Prepaid expenses and other ( 57 ) ( 44 )

Prepaid expenses and other assets ( 805 ) ( 395 )

Accounts payable ( 23 ) 139

6 unchanged sentences

Purchase of short-term investments — ( 315 )

Proceeds from maturity of short-term investments — 364

Other, net 8 10

1 unchanged sentence

FINANCING ACTIVITIES

Proceeds from (repayments of) short-term borrowings, net — ( 48 )

Repayments of short-term borrowings ( 200 ) ( 114 )

Principal repayments of long-term debt ( 2,294 ) ( 684 )

19 unchanged sentences

stock Total shareholders’ equity

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

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

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

4 unchanged sentences

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

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

At February 28, 2023 $ 12 $ 361 $ 16,635 $ ( 434 ) $ ( 1,972 ) $ ( 8,433 ) $ 6,170

Net income (loss) — — — ( 407 ) — — ( 407 )

Other comprehensive income (loss) — — — — 69 — 69

Issuances of common stock, net — — 5 — — — 5

Conversion of Convertible Notes — — 3 — — — 3

Purchases and issuances under the Stock Swap program, net — — 22 — — ( 20 ) 2

Issuance of treasury shares for vested share-based awards — — ( 5 ) — — 5 —

Share-based compensation and other — — 24 — — ( 1 ) 23

At May 31, 2023 $ 12 $ 361 $ 16,684 $ ( 841 ) $ ( 1,903 ) $ ( 8,449 ) $ 5,865

Six Months Ended

stock Ordinary

shares Additional

capital Retained

earnings (accumulated deficit) AOCI Treasury

stock Total shareholders’ equity

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

Net income (loss) — — — ( 3,726 ) — — ( 3,726 )

Other comprehensive income (loss) — — — — ( 241 ) — ( 241 )

Issuances of common stock, net — — 30 — — — 30

Purchases and issuances under the Stock Swap program, net — — 89 — — ( 82 ) 8

Issuance of treasury shares for vested share-based awards — — — ( 72 ) — 72 —

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

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

At November 30, 2022 $ 12 $ 361 $ 16,872 $ 269 $ ( 1,982 ) $ ( 8,468 ) $ 7,065

Change in accounting principle (a) — — ( 229 ) ( 10 ) — — ( 239 )

1 unchanged sentence

Other comprehensive income (loss) — — — — 79 — 79

Issuances of common stock, net — — 5 — — — 5

Conversion of Convertible Notes — — 3 — — — 3

Purchases and issuances under the Stock Swap program, net — — 22 — — ( 20 ) 2

Issuance of treasury shares for vested share-based awards — — ( 41 ) — — 41 —

Share-based compensation and other — — 52 — — ( 2 ) 50

At February 28, 2023 $ 12 $ 361 $ 16,635 $ ( 434 ) $ ( 1,972 ) $ ( 8,433 ) $ 6,170

At May 31, 2023 $ 12 $ 361 $ 16,684 $ ( 841 ) $ ( 1,903 ) $ ( 8,449 ) $ 5,865

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

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

As of May 31, 2023, our return to guest cruise operations was complete.

As part of our liquidity management, we rely on estimates of our future liquidity, which includes numerous assumptions that are subject to various risks and uncertainties.

2 unchanged sentences

• Expected increases in revenue in 2023 on a per passenger basis compared to 2019

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

• Expected improvement in occupancy on a year-over-year basis

• Stabilization of fuel prices around or below November 2022 year-end prices

6 unchanged sentences

For the past three years we have taken appropriate actions to manage our liquidity, including completing various capital market transactions, obtaining relevant financial covenant amendments or waivers (see Note 3 - “Debt”), accelerating the removal of certain ships from the fleet, and during the pause, reducing capital expenditures and operating expenses.

As of February 28, 2023, our return to guest cruise operations was essentially complete.

Based on these actions and our assumptions, and considering our $ 8.1 billion of liquidity including cash and cash equivalents and borrowings available under our $ 1.7 billion, € 1.0 billion and £ 0.2 billion multi-currency revolving credit facility (the “Revolving Facility”) at February 28, 2023, we believe that we have sufficient liquidity to fund our obligations and expect to remain in compliance with our financial covenants for at least the next twelve months from the issuance of these financial statements.

Based on these actions and our assumptions, and considering our $ 7.3 billion of liquidity including cash and cash equivalents and borrowings available under our $ 1.6 billion, € 1.0 billion and £ 0.2 billion multi-currency revolving credit facility (the “Revolving Facility”) at May 31, 2023, we believe that we have sufficient liquidity to fund our obligations and expect to remain in compliance with our financial covenants for at least the next twelve months from the issuance of these financial statements.

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.

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, 2023 and 2022, and the Consolidated Balance Sheet at February 28, 2023 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), the Consolidated Statements of Cash Flows and the Consolidated Statements of Shareholders’ Equity for the three and six months ended May 31, 2023 and 2022, and the Consolidated Balance Sheet at May 31, 2023 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 2022 joint Annual Report on Form 10-K (“Form 10-K”) filed with the U.S.

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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.

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

reported and disclosed.

The full extent to which the effects of the pandemic, inflation, higher fuel prices, higher interest rates and fluctuations in foreign currency 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 and collectability of trade and notes receivables, will depend on future developments that are uncertain.

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In December 2022, the FASB deferred the date through which this guidance can be applied from December 31, 2022 to December 31, 2024.

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.

As of February 28, 2023, approximately $ 5.8 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.

We adopted this new guidance during 2022 and applied it prospectively to contract modifications related to a change in reference rate.

The adoption of this guidance did not have a material impact on our consolidated financial statements.

We expect that all of our outstanding debt and derivative instruments referenced to U.S.

dollar LIBOR will be transitioned to Term Secured Overnight Financing Rate (“SOFR”) by June 30, 2023.

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.

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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.

On December 1, 2022, we adopted this guidance using the modified retrospective approach to recognize our convertible notes as single unit liability instruments, as they do not qualify as derivatives under ASC 815 and were not issued at a substantial premium.

Accordingly, upon adoption we recorded a $ 239 million increase to debt, primarily as a result of the reversal of the remaining non-cash convertible debt discount, as well as a reduction of $ 229 million to additional paid in capital.

3 unchanged sentences

This guidance is expected to improve financial reporting by requiring new disclosures about the programs, thereby allowing financial statement users to better consider the effect of the programs on an entity’s working capital, liquidity, and cash flows.

This guidance is effective for fiscal years beginning after December 15, 2022, except for the amendment on roll forward information which is effective for fiscal years beginning after December 15, 2023.

This guidance is required to be adopted by us in the first quarter of 2024, except for the amendment on roll forward information which is required to be adopted by us for the financial year commencing on December 1, 2024.

We are currently evaluating the impact of the new guidance on the disclosures to our consolidated financial statements.

11 unchanged sentences

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 months ended February 28, 2023 and 2022, fees, taxes, and charges included in commissions, transportation and other costs were $ 172 million and $ 68 million.

For the three and six months ended May 31, fees, taxes, and charges included in commissions, transportation and other costs were $ 173 million and $ 344 million in 2023 and $ 96 million and $ 164 million in 2022.

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

8 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 $ 5.7 billion as of February 28, 2023 and $ 5.1 billion as of November 30, 2022, w hich includes approximately $ 174 million of unredeemed FCCs as of February 28, 2023, of which approximately $ 124 million are refundable.

We had total customer deposits of $ 7.2 billion as of May 31, 2023 and $ 5.1 billion as of November 30, 2022, w hich includes approximately $ 162 million of unredeemed FCCs as of May 31, 2023, of which approximately $ 119 million are refundable.

Given the uncertainty of travel demand caused by COVID-19 and lack of comparable historical experience of FCC redemptions, we are unable to estimate the amount of FCCs that will be used in future periods or that may be refunded.

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

During the three months ended February 28, 2023 and 2022, we recognized revenues of $ 2.8 billion and $ 1.0 billion related to our customer deposits as of November 30, 2022 and 2021.

During the six months ended May 31, 2023 and 2022, we recognized revenues of $ 3.6 billion and $ 1.4 billion related to our customer deposits as of November 30, 2022 and 2021.

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

9 unchanged sentences

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 incremental costs of obtaining contracts with customers recognized as assets o f $ 228 million as of February 28, 2023 and $ 218 million as of November 30, 2022 .

We had incremental costs of obtaining contracts with customers recognized as assets of $ 322 million as of May 31, 2023 and $ 218 million as of November 30, 2022 .

NOTE 3 – Debt

February 28, November 30,

May 31, November 30,

(in millions) Maturity Rate (a) (b) 2023 2022

22 unchanged sentences

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

EUR floating rate Apr 2023 - Mar 2026 EURIBOR + 1.8 - 2.4 %

EUR floating rate (e) Apr 2024 - Mar 2026 EURIBOR + 2.4 - 4.0 %

Export Credit Facilities

Floating rate Oct 2024 - Dec 2031 LIBOR + 0.8 - 1.5 %

Floating rate Dec 2031 LIBOR + 0.8

Fixed rate Aug 2027 - Dec 2032 2.4 - 3.4 %

EUR floating rate Mar 2023 - Nov 2034 EURIBOR + 0.2 - 1.6 %

EUR fixed rate Feb 2031 - Dec 2034 1.1 - 3.1 %

EUR floating rate May 2024 - Nov 2034 EURIBOR + 0.2 - 0.8 %

EUR fixed rate Feb 2031 - Jan 2036 1.1 - 3.4 %

Total Unsecured Subsidiary Guaranteed 21,874 23,019

11 unchanged sentences

(a) The reference rates for substantially all of our LIBOR and EURIBOR based variable debt have 0.0 % to 0.75 % floors.

(b) The above debt table excludes the impact of our interest rate swaps and as of February 28, 2023, it also excludes the impact of our foreign currency swaps.

As of November 30, 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.

See “Short-Term Borrowings” below.

(b) The above debt table excludes the impact of any outstanding derivative contracts.

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

(d) The interest rate for the GBP unsecured loan is subject to a credit adjustment spread ranging from 0.03 % to 0.28 %.

The referenced SONIA rate with the credit adjustment spread is subject to a 0 % floor.

The referenced Sterling Overnight Index Average (“SONIA”) rate with the credit adjustment spread is subject to a 0 % floor.

(e) In March 2023, we entered into an amendment of a EUR floating rate loan to extend maturity through April 2024.

Carnival Corporation and/or Carnival plc is the primary obligor of all our outstanding debt excluding $ 0.5 billion under a term loan facility of Costa Crociere S.p.A.

(“Costa”), a subsidiary of Carnival plc, and $ 2.0 billion of senior priority notes (the “2028 Senior Priority Notes”) issued by Carnival Holdings (Bermuda) Limited (“Carnival Holdings”), a subsidiary of Carnival Corporation.

(“Costa”), a subsidiary of Carnival plc, $ 2.0 billion of senior priority notes (the “2028 Senior Priority Notes”) issued by Carnival Holdings (Bermuda) Limited (“Carnival Holdings”), a subsidiary of Carnival Corporation, and $ 0.2 billion under an export credit facility of Sun Princess Limited, a subsidiary of Carnival Corporation.

All our outstanding debt is issued or guaranteed by substantially the same entities with the exception of the following:

1 unchanged sentence

• Our 2028 Senior Priority Notes, issued by Carnival Holdings, which does not guarantee our other outstanding debt

As of February 28, 2023, the scheduled maturities of our debt are as follows:

• The export credit facility of Sun Princess Limited, which does not guarantee our other outstanding debt

As of May 31, 2023, the scheduled maturities of our debt are as follows:

(in millions)

Year Principal Payments

2Q 2023 (a) $ 785

2024 (a) (b) 2,734

3Q 2023 $ 394

2024 (a) 2,420

Thereafter 16,803

Total $ 34,511

(a) Subsequent to February 28, 2023, we extended the maturity of $ 211 million of principal payments from second quarter 2023 to 2024.

(b) Includes borrowings of $ 0.2 billion under our Revolving Facility.

(a) Subsequent to May 31, 2023, we pre-paid $ 300 million of 2024 debt maturities.

Short-Term Borrowings

As of February 28, 2023 and November 30, 2022, our short-term borrowings consisted of $ 0.2 billion under our Revolving Facility.

As of May 31, 2023 we did not have short-term borrowings.

As of November 30, 2022, our short-term borrowings consisted of $ 0.2 billion under our Revolving Facility.

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 $ 2.6 billion available for borrowing under our Revolving Facility as of February 28, 2023.

We had $ 2.9 billion available for borrowing under our Revolving Facility as of May 31, 2023.

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.

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In February 2023, Carnival Holdings (Bermuda) II Limited (“Carnival Holdings II”) entered into a $ 2.1 billion multi-currency revolving facility (“New Revolving Facility”).

The New Revolving Facility may be utilized beginning on August 6, 2024, and will replace the existing Revolving Facility upon its maturity in August 2024.

The New Revolving Facility may be utilized beginning on August 6, 2024, and will replace our Revolving Facility upon its maturity in August 2024.

The termination date of the New Revolving Facility is August 6, 2025, subject to two, mutual one-year extension options.

The new facility also contains an accordion

feature, allowing for additional commitments, up to an aggregate of $ 2.9 billion, which are the aggregate commitments under our Revolving Facility.

The new facility also contains an accordion feature, allowing for additional commitments, up to an aggregate of $ 2.9 billion, which are the aggregate commitments under our Revolving Facility.

Borrowings under the New Revolving Facility will bear interest at a rate of term SOFR, in relation to any loan in U.S.

2 unchanged sentences

In addition, we are required to pay certain fees on the aggregate unused commitments under the New Revolving Facility and the Revolving Facility.

In connection with the New Revolving Facility, Carnival Corporation, Carnival plc and its subsidiaries will contribute three unencumbered vessels (net book value of $ 2.9 billion as of February 28, 2023) to Carnival Holdings II (which must be completed no later than February 28, 2024).

In connection with the New Revolving Facility, Carnival Corporation, Carnival plc and its subsidiaries will contribute three unencumbered vessels (net book value of $ 3.0 billion as of May 31, 2023) to Carnival Holdings II (which must be completed no later than February 28, 2024).

Each of the vessels will continue to be operated under one of the Carnival Corporation & plc brands.

1 unchanged sentence

Export Credit Facility Borrowings

During the three months ended February 28, 2023, we borrowed $ 0.8 billion under an export credit facility due in semi-annual installments through 2034.

As of February 28, 2023, the net book value of the vessels subject to negative pledges was $ 15.3 billion.

During the six months ended May 31, 2023, we borrowed $ 0.8 billion under an export credit facility due in semi-annual installments through 2035 and $ 0.2 billion under an export credit facility due in semi-annual installments starting in July 2024 through 2036.

In addition, we paid down $ 1.0 billion of floating rate unsecured borrowings mostly with 2023 and 2024 maturities.

As of May 31, 2023, the net book value of the vessels subject to negative pledges was $ 15.4 billion.

Collateral and Priority Pool

As of February 28, 2023, the net book value of our ships and ship improvements, excluding ships under construction, is $ 37.2 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 $ 23.5 billion, including $ 21.8 billion related to vessels and certain assets related to those vessels) as of February 28, 2023 and certain other assets.

As of February 28, 2023, $ 8.3 billion in net book value of our ships and ship improvements have been contributed to Carnival Holdings and included in the vessel priority pool of 12 unencumbered vessels (the “Senior Priority Notes Subject Vessels”) for our 2028 Senior Priority Notes.

As of February 28, 2023, there was no change in the identity of the Senior Priority Notes Subject Vessels.

As of May 31, 2023, the net book value of our ships and ship improvements, excluding ships under construction, is $ 37.1 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 $ 23.3 billion, including $ 21.7 billion related to vessels and certain assets related to those vessels) as of May 31, 2023 and certain other assets.

As of May 31, 2023, $ 8.3 billion in net book value of our ships and ship improvements have been contributed to Carnival Holdings and included in the vessel priority pool of 12 unencumbered vessels (the “Senior Priority Notes Subject Vessels”) for our 2028 Senior Priority Notes.

As of May 31, 2023, there was no change in the identity of the Senior Priority Notes Subject Vessels.

Covenant Compliance

As of February 28, 2023, our Revolving Facility, unsecured loans and export credit facilities contain certain covenants listed below:

• Maintain minimum interest coverage (adjusted EBITDA to consolidated net interest charges, as defined in the agreements) (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 issued capital and consolidated reserves (as defined in the agreements) of $ 5.0 billion

• Limit our debt to capital (as defined in the agreements) percentage from the November 30, 2021 testing date until the May 31, 2023 testing date, to a percentage not to exceed 75 %, following which it will be tested at levels which decline ratably to 65 % from the May 31, 2024 testing date onwards

• Maintain minimum liquidity of $ 1.5 billion through November 30, 2026

• Adhere to certain restrictive covenants through November 30, 2024

As of May 31, 2023, our Revolving Facility, New Revolving Facility, unsecured loans and export credit facilities contain certain covenants listed below:

• Maintain minimum interest coverage (adjusted EBITDA to consolidated net interest charges, as defined in the agreements) (the “Interest Coverage Covenant”) as follows:

◦ For certain of our unsecured loans and our New Revolving Facility, from the end of each fiscal quarter from August 31, 2024, at a ratio of not less than 2.0 to 1.0 for each testing date occurring from August 31, 2024 until May 31, 2025, at a ratio of not less than 2.5 to 1.0 for the August 31, 2025 and November 30, 2025 testing dates, and at a ratio of not less than 3.0 to 1.0 for the February 28, 2026 testing date onwards and as applicable through their respective maturity dates.

In addition, for our remaining unsecured loans that contain this covenant, we entered into letter agreements to waive compliance with the covenant through the May 31, 2024 testing date.

◦ For substantially all of our export credit facilities, from the end of each fiscal quarter from May 31, 2024, at a ratio of not less than 2.0 to 1.0 for each testing date occurring from May 31, 2024 until May 31, 2025, at a ratio of not less than 2.5 to 1.0 for the August 31, 2025 and November 30, 2025 testing dates, and at a ratio of not less than 3.0 to 1.0 for the February 28, 2026 testing date onwards

• For certain of our unsecured loans and export credit facilities, maintain minimum issued capital and consolidated reserves (as defined in the agreements) of $ 5.0 billion

• Limit our debt to capital (as defined in the agreements) percentage to a percentage not to exceed 75 % until the May 31, 2023 testing date, following which it will be tested at levels which decline ratably to 65 % from the May 31, 2024 testing date onwards

• Maintain minimum liquidity as follows:

◦ For our New Revolving Facility, minimum liquidity of $ 1.5 billion;

provided, that if any commitments maturing on June 30, 2025 under our existing first-lien term loan facility are outstanding on the March 31,

2025 testing date, our minimum liquidity on such testing date cannot be less than the greater of (i) the aggregate outstanding amount of such first-lien term loan facility commitments and (ii) $ 1.5 billion

◦ For our other unsecured loans and export credit facilities that contain this covenant, $ 1.5 billion through November 30, 2026

• Adhere to certain restrictive covenants through August 2025

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

As of March 13, 2023, we entered into letter agreements to waive compliance with the Interest Coverage Covenant through the May 31, 2024 testing date under our Revolving Facility and unsecured loans that contain the covenant.

In addition, we entered into amendments for substantially all of our export credit facilities to maintain a minimum interest coverage ratio of not less than 2.0 to 1.0 for the May 31, 2024 testing date.

We also entered into amendments for certain of our unsecured loans with an aggregate principal amount of $ 150 million to maintain a minimum interest coverage ratio of not less than 2.0 to 1.0 for the August 31, 2024 testing date.

At February 28, 2023 , 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 and/or cross-acceleration clauses therein,

substantially all of our outstanding debt and derivative contract payables could become due, and our debt and derivative contracts could be terminated.

At May 31, 2023 , 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 and/or cross-acceleration clauses therein, substantially all of our outstanding debt and derivative contract payables could become due, and our debt and derivative contracts could be terminated.

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

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On August 31, 2022, the court determined that the trebling provision of the Helms-Burton statute applies to damages and interest and accordingly, we adjusted our estimated liability for this matter.

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

On December 30, 2022, the court entered judgment against Carnival in the amount of $ 110 million plus $ 4 million in fees and costs.

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District Court for the Middle District of Florida seeking declaratory relief that DeCurtis is not infringing on several of Carnival Corporation’s patents in relation to its OCEAN Medallion systems and technology.

The action also raises certain monopolization claims under The Sherman Antitrust Act of 1890, unfair competition and tortious interference, and seeks declaratory judgment that certain Carnival Corporation patents are unenforceable.

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.

The action also raised certain monopolization claims under The Sherman Antitrust Act of 1890, unfair competition and tortious interference, and sought declaratory judgment that certain Carnival Corporation patents are unenforceable.

DeCurtis sought damages, including its fees and costs, and 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 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.

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

These two cases were consolidated in the Southern District of Florida.

On February 8, 2023, the Court granted summary judgment in Carnival’s favor on DeCurtis’ antitrust, unfair competition, and tortious interference claims.

The trial began on February 27, 2023, with the patent issues narrowed to certain claims of one Carnival patent.

On March 10, 2023, the jury returned a verdict finding that DeCurtis had breached its contract with Carnival and infringed the asserted claims of the Carnival patent.

The jury also found that the same claims of the challenged patent were valid.

The jury awarded Carnival a total of $ 21 million in damages.

On February 8, 2023, the Court granted summary judgment in Carnival Corporation’s favor on DeCurtis’ antitrust, unfair competition, and tortious interference claims.

The trial began on February 27, 2023, with the patent issues narrowed to certain claims of one Carnival Corporation patent.

On March 10, 2023, the jury returned a verdict finding that DeCurtis had breached its contract with Carnival Corporation and infringed on the Carnival Corporation patent.

The jury awarded Carnival Corporation a total of $ 21 million in damages.

On April 30, 2023, DeCurtis filed for Chapter 11 in the United States Bankruptcy Court for the District of Delaware.

Carnival Corporation is defending its interests in the bankruptcy matter.

COVID-19 Actions

5 unchanged sentences

Substantially all of these individual actions have now been dismissed or settled for immaterial amounts.

As of February 28, 2023, 11 purported class actions have been brought by former guests in several U.S.

As of May 31, 2023, 11 purported class actions have been brought by former guests in several U.S.

federal courts, the Federal Court in Australia, and in Italy.

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, 2023, 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 and Italian matters remain.

As of May 31, 2023, 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 and Italian matters remain.

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

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

18 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, 2023 and November 30, 2022 , we had $ 1.7 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, 2023 and November 30, 2022 , we had $ 229 million in compensating deposits we are required to maintain and $ 30 million of cash collateral in escrow which is included within other assets.

As of May 31, 2023 and November 30, 2022 , we had $ 2.2 billion and $ 1.7 billion in reserve funds related to our customer deposits provided to satisfy these requirements which are included within other assets.

Additionally, as of May 31, 2023 and November 30, 2022 , we had $ 237 million and $ 229 million in compensating deposits we are required to maintain and $ 30 million of cash collateral in escrow which is included within other assets.

Subsequent to May 31, 2023, we provided $ 380 million in restricted cash deposits which will be included within other assets.

We continue to expect to provide reserve funds and restricted cash deposits under these agreements.

Ship Commitments

As of February 28, 2023, we expect the timing of our new ship growth capital commitments to be as follows:

As of May 31, 2023, we expect the timing of our new ship growth capital commitments to be as follows:

(in millions)

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

February 28, 2023 November 30, 2022

May 31, 2023 November 30, 2022

Value Fair Value Carrying

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Total $ 34,511 $ — $ 29,817 $ — $ 35,615 $ — $ 28,656 $ —

(a) The debt amounts above do not include the impact of interest rate swaps or debt issuance costs.

(a) The debt amounts above do not include the impact of interest rate swaps or debt issuance costs and discounts.

The fair values of our publicly-traded notes were based on their unadjusted quoted market prices in markets that are not sufficiently active to be Level 1 and, accordingly, are considered Level 2.

1 unchanged sentence

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

February 28, 2023 November 30, 2022

May 31, 2023 November 30, 2022

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

5 unchanged sentences

Total $ — $ 41 $ — $ — $ — $ —

The restricted cash amount at February 28, 2023 includes $ 20 million, which is included in other assets.

The restricted cash amount at May 31, 2023 includes $ 20 million, which is included in other assets.

Nonfinancial Instruments that are Measured at Fair Value on a Nonrecurring Basis

Valuation of Goodwill and Trademarks

As of February 28, 2023 and November 30, 2022 , goodwill for our North America and Australia (“NAA”) segment was $ 579 million.

As of May 31, 2023 and November 30, 2022 , goodwill for our North America and Australia (“NAA”) segment was $ 579 million.

(in millions) NAA

3 unchanged sentences

Exchange movements — 8 8

February 28, 2023 $ 927 $ 225 $ 1,152

May 31, 2023 $ 927 $ 231 $ 1,158

Derivative Instruments and Hedging Activities

(in millions) Balance Sheet Location February 28, 2023 November 30, 2022

(in millions) Balance Sheet Location May 31, 2023 November 30, 2022

Derivative assets

3 unchanged sentences

Other assets — 1

Derivatives not designated as hedging instruments

Interest rate swaps (b) Prepaid expenses and other 1 —

Total derivative assets $ 21 $ 1

3 unchanged sentences

Total derivative liabilities $ 41 $ —

(a) At February 28, 2023, we had a cross currency swap totaling $ 643 million that is designated as a hedge of our net investment in foreign operations with euro-denominated functional currencies.

At February 28, 2023, this cross currency swap settles through 2024.

(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 $ 91 million at February 28, 2023 and $ 89 million at November 30, 2022 of EURIBOR-based floating rate euro debt to fixed rate euro debt.

During the three months ended February 28, 2023 we entered into interest rate swap agreements which effectively changed $ 2.5 billion at February 28, 2023 of LIBOR-based floating rate USD debt to fixed rate USD debt.

At February 28, 2023, these interest rate swaps settle through 2027.

(a) At May 31, 2023, we had a cross currency swap totaling $ 653 million that is designated as a hedge of our net investment in foreign operations with euro-denominated functional currencies.

At May 31, 2023, this cross currency swap settles through 2024.

(b) We have interest rate swaps whereby we receive EURIBOR-based floating interest rate payments in exchange for making fixed interest rate payments.

These interest rate swap agreements effectively changed $ 69 million at May 31, 2023 and $ 89 million at November 30, 2022 of EURIBOR-based floating rate euro debt to fixed rate euro debt.

As of May 31, 2023, these EURIBOR-based interest rate swaps were not designated as cash flow hedges.

As of November 30, 2022, one of these swaps was designated as a cash flow hedge.

During the six months ended May 31, 2023 we entered into interest rate swap agreements which effectively changed $ 2.5 billion at May 31, 2023 of LIBOR-based floating rate

USD debt to fixed rate USD debt.

At May 31, 2023, these interest rate swaps settle through 2027 and are designated as cash flow hedges.

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.

February 28, 2023

(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) 2023 2022 2023 2022

1 unchanged sentence

Cross currency swaps – net investment hedges - included component

$ ( 5 ) $ 27 $ 9 $ 33

Cross currency swaps – net investment hedges - excluded component

6 unchanged sentences

Cross currency swaps – Interest expense, net of capitalized interest

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.

$ 3 $ 3 $ 4 $ 4

The amount of gains and losses on derivatives not designated as hedging instruments recognized in earnings during the three and six months ended May 31, 2023 and estimated cash flow hedges’ unrealized gains and losses that are expected to be reclassified to earnings in the next twelve months are not material.

Financial Risks

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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 February 28, 2023, we have designated $ 418 million of our sterling-denominated debt as non-derivative hedges of our net investments in foreign operations and also had a cross currency swap with a notional amount of $ 643 million, which is designated as a hedge of our net investments in foreign operations.

For the three months ended February 28, 2023, we recognized $ 11 million of gains on these net investment hedges in the cumulative translation adjustment section of other comprehensive income (loss).

As of May 31, 2023, we have designated $ 432 million of our sterling-denominated debt as non-derivative hedges of our net investments in foreign operations and also had a cross currency swap with a notional amount of $ 653 million, which is designated as a hedge of our net investments in foreign operations.

For the three and six months ended May 31, 2023, we recognized $ 20 million and $ 9 million of losses on these 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.

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, 2023, our remaining newbuild currency exchange rate risk primarily relates to euro-denominated newbuild contract payments for non-euro functional currency brands, which represent a total unhedged commitment of $ 3.7 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.

At May 31, 2023, our remaining newbuild currency exchange rate risk relates to euro-denominated newbuild contract payments for non-euro functional currency brands, which represent a total unhedged commitment of $ 3.5 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’ functional currency will be affected by foreign currency exchange rate fluctuations.

These foreign currency exchange rate fluctuations may affect our decision to order new cruise ships.

13 unchanged sentences

Normally, we have not required collateral or other security to support normal credit sales.

Historically, we have not experienced significant credit losses, including counterparty nonperformance;

however, because of the continued effects the pandemic is having on economies, we have experienced, and may continue to experience, an increase in credit losses.

We have not experienced significant credit losses, including counterparty nonperformance on our trade receivables and contingent obligations.

NOTE 6 – Segment Information

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

We have renamed the EA segment given that China has not reopened to international cruise travel.

Beginning in the first quarter of 2023, we renamed the EA segment given that China has not reopened to international cruise travel.

As a result, we have significantly reduced operations in Asia and leveraged the mobility of our cruise ships and our brand portfolio to build alternate deployments.

In 2019, our most recent full year of guest cruise operations, China accounted for 7 % of our guests.

Three Months Ended February 28,

Three Months Ended May 31,

(in millions) Revenues Operating costs and

13 unchanged sentences

$ 2,401 $ 2,683 $ 619 $ 572 $ ( 1,473 )

Six Months Ended May 31,

(in millions) Revenues Operating costs and

expenses Selling

administrative Depreciation

amortization Operating

income (loss)

NAA $ 6,434 $ 4,471 $ 875 $ 738 $ 351

Europe 2,759 2,179 436 338 ( 193 )

Cruise Support 106 55 124 90 ( 162 )

Tour and Other 44 64 14 13 ( 47 )

$ 9,343 $ 6,768 $ 1,448 $ 1,179 $ ( 52 )

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

Europe 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 )

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

Three Months Ended February 28,

Three Months Ended

May 31, Six Months Ended

(in millions) 2023 2022 2023 2022

2 unchanged sentences

Australia 307 4 645 4

Other 169 35 380 61

$ 4,911 $ 2,401 $ 9,343 $ 4,024

1 unchanged sentence

Three Months Ended

May 31, Six Months Ended

(in millions, except per share data) 2023 2022 2023 2022

7 unchanged sentences

Three Months Ended

May 31, Six Months Ended

(in millions) 2023 2022 2023 2022

3 unchanged sentences

NOTE 8 – Supplemental Cash Flow Information

(in millions) February 28, 2023 November 30, 2022

(in millions) May 31, 2023 November 30, 2022

Cash and cash equivalents (Consolidated Balance Sheets) $ 4,468 $ 4,029

3 unchanged sentences

NOTE 9 – Property and Equipment

During the three months ended February 28, 2023 we completed the sale of one Europe segment ship and entered into an agreement to sell one Europe segment ship, which was subsequently completed in March 2023.

These ship sales collectively represent a passenger-capacity reduction of 3,970 berths for our Europe segment.

Additionally, in March 2023 we sold one NAA segment ship, which represents a passenger-capacity reduction of 460 berths.

The net book value of the ships sold subsequent to quarter end was $ 186 million and will result in gains on the sales.

During 2023 we completed the sale of two Europe segment ships and one NAA segment ship, which represents a passenger-capacity reduction of 3,970 berths for our Europe segment and 460 berths for our NAA segment.

We will continue to operate the NAA segment ship under a bareboat charter agreement through September 2024.

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, 2023 under the Stock Swap Program, there were no sales or repurchases.

During the three months ended February 28, 2022 under the Stock Swap Program, we sold 1.3 million shares of Carnival Corporation 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, 2023, there were no sales of Carnival Corporation common stock .

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, 2023 under the Stock Swap Program, we sold 2.3 million shares of Carnival Corporation 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 and six months ended May 31, 2022 under the Stock Swap Program, we sold 3.9 million and 5.2 million shares of Carnival Corporation 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.

In addition, during the three and six months ended May 31, 2023, we sold 0.5 million shares of Carnival Corporation common stock at an average price per share of $ 9.83 , resulting in net proceeds of $ 5 million .

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