REG - Carnival PLC - Final Results
27/01/2025 13:15
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RNS Number : 8118U Carnival PLC 27 January 2025
January 27, 2025
RELEASE OF CARNIVAL CORPORATION & PLC JOINT ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED NOVEMBER 30, 2024.
Carnival Corporation & plc announced its fourth quarter results of
operations in its earnings release issued on December 20, 2024. Carnival
Corporation & plc is hereby announcing that today it has filed its joint
Annual Report on Form 10-K ("Form 10-K") with the U.S. Securities and Exchange
Commission ("SEC") containing the Carnival Corporation & plc 2024 annual
consolidated financial statements, which reported results are unchanged from
those previously announced on December 20, 2024.
The information included in the Form 10-K (Schedule A) has been prepared in
accordance with SEC rules and regulations. The Carnival Corporation & plc
consolidated financial statements contained in the Form 10-K have been
prepared in accordance with generally accepted accounting principles in the
United States of America ("U.S. GAAP").
Schedule A contains information on Carnival Corporation and Carnival plc's
sales and purchases of their equity securities and use of proceeds from such
sales, Carnival Corporation & plc's management's discussion and analysis
of financial conditions and results of operation, and the Carnival
Corporation & plc consolidated financial statements as of and for the year
ended November 30, 2024.
The Directors consider that within the Carnival Corporation and Carnival plc
dual listed company arrangement, the most appropriate presentation of Carnival
plc's results and financial position is by reference to the Carnival
Corporation & plc U.S. GAAP consolidated financial statements.
MEDIA CONTACT INVESTOR RELATIONS CONTACT
Jody Venturoni Beth Roberts
001 469 797 6380 001 305 406 4832
The Form 10-K is available for viewing on the SEC website at www.sec.gov under
Carnival Corporation or Carnival plc or the Carnival Corporation & plc
website at www.carnivalcorp.com or www.carnivalplc.com. A copy of the Form
10-K has been submitted to the National Storage Mechanism and will shortly be
available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism. Additional
information can be obtained via Carnival Corporation & plc's website
listed above or by writing to Carnival plc at Carnival House, 100 Harbour
Parade, Southampton, SO15 1ST, United Kingdom.
Carnival Corporation & plc is the largest global cruise company, and among
the largest leisure travel companies, with a portfolio of world-class cruise
lines - AIDA Cruises, Carnival Cruise Line, Costa Cruises, Cunard, Holland
America Line, P&O Cruises (Australia), P&O Cruises (UK), Princess
Cruises, and Seabourn.
Additional information can be found on www.carnivalcorp.com, www.aida.de,
www.carnival.com, www.costacruise.com (http://www.costacruise.com) ,
www.cunard.com (http://www.cunard.com) , www.hollandamerica.com
(http://www.hollandamerica.com) , www.pocruises.com.au
(http://www.pocruises.com.au) , www.pocruises.com (http://www.pocruises.com) ,
www.princess.com (http://www.princess.com) and www.seabourn.com
(http://www.seabourn.com) . For more information on Carnival Corporation's
industry-leading sustainability initiatives, visit
www.carnivalsustainability.com (http://www.carnivalsustainability.com) .
SCHEDULE A
Market for Registrants' Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities.
A. Market Information
Carnival Corporation common stock, together with paired trust shares of
beneficial interest in the P&O Princess Special Voting Trust, which holds
a Special Voting Share of Carnival plc, is traded on the NYSE under the symbol
"CCL." Carnival plc ordinary shares trade on the London Stock Exchange under
the symbol "CCL." Carnival plc American Depositary Shares ("ADSs"), each one
of which represents one Carnival plc ordinary share, are traded on the NYSE
under the symbol "CUK." The depositary for the ADSs is JPMorgan Chase Bank,
N.A.
B. Holders
As of January 13, 2025, there were 2,315 holders of record of Carnival
Corporation common stock and 28,223 holders of record of Carnival plc ordinary
shares and 400 holders of record of Carnival plc ADSs.
C. Dividends
We do not expect to pay dividends on Carnival Corporation common stock and
Carnival plc ordinary shares for at least the next couple of years.
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
2024 Executive Overview
We had a strong year, setting records and achieving milestones, including:
• Full year revenues hit an all-time high of $25 billion, over 15
percent higher than the prior year
• Seven consecutive quarters of record revenues
• Record full year operating income of $3.6 billion, over 80
percent higher than the prior year
• All-time high cash from operations of almost $6 billion
• Higher ticket prices for 2024 versus 2023 for all of our major
cruise lines and onboard spending levels that accelerated sequentially each
quarter throughout the year
• Record booking trends and record year-end customer deposits,
indicating a continuation of the strong momentum we've been experiencing for
the last two years
We remain laser focused on further reducing interest expense and rebuilding
our investment-grade balance sheet. During 2024, we made debt prepayments of
over $3 billion, bringing our total prepayments to over $7 billion since the
beginning of 2023. Additionally, we have reduced our debt balance by over $8
billion from the peak in January 2023, ending the year with $27.5 billion of
debt.
We are delivering long-term value for our shareholders through improved
operational execution across our cruise lines. We ended 2024 with adjusted
return on invested capital ("ROIC") comfortably above our cost of capital.
We welcomed three new ships during 2024: Carnival Jubilee, the third of five
Excel class vessels for Carnival Cruise Line; Sun Princess, Princess Cruises'
next generation flagship which was just awarded Conde Nast Traveler's 2024
Mega Ship of the year in the U.S.; and Queen Anne, Cunard's first new ship in
14 years.
We have also been focusing on each of our cruise lines' unique target markets,
launching new marketing campaigns across all our brands. In 2024, both
new-to-cruise and repeat guests were each up double-digit percentages and we
continue to attract new cruise guests as we work to increase awareness and
consideration for cruise travel globally.
We continue to advance our enhanced destination strategy to provide guests
with yet another reason to take a cruise vacation with us. Celebration Key,
our new exclusive cruise port destination on Grand Bahama Island, is scheduled
to open in the summer of 2025, with an additional pier opening in the fall of
2026. Its five portals built for fun will further expand our experience
offerings with an abundance of features and amenities for our guests.
Celebration Key will be our largest and closest destination in our portfolio,
saving fuel costs and reducing greenhouse gas emissions. In addition, we
recently announced plans to enhance Half Moon Cay, our highly rated and
award-winning exclusive Bahamian destination. The enhancements will lean
further into this destination's natural beauty and pristine appeal,
reinforcing its new name - RelaxAway, Half Moon Cay. Featuring a newly
constructed pier that is expected to be ready in the summer of 2026, the
destination will allow two ships to dock, including Carnival Cruise Line's
largest ships that will be able to visit for the first time. We believe
developing and promoting these unique assets will help us cast the net wider
and capture even more new-to-cruise demand.
During 2024, we also continued making progress towards our sustainability
goals. We reduced our greenhouse gas emission intensity by approximately 17.5
percent compared to 2019, on track to achieve our targeted reduction of 20
percent by the end of 2026, a goal that was previously pulled forward by four
years. We have also lowered our absolute greenhouse gas emissions by almost 10
percent since 2019, despite capacity growth of over nine percent over the same
period.
We are grateful for the efforts of our hard working and dedicated team who
delivered a step change improvement in 2024 and set us up very well for 2025
and beyond, while consistently delivering unforgettable happiness to over 13
and a half million people in 2024, by providing them with extraordinary cruise
vacations while honoring the integrity of every ocean we sail, place we visit
and life we touch.
New Accounting Pronouncements
Refer to our consolidated financial statements for further information on
Accounting Pronouncements.
Critical Accounting Estimates
Our critical accounting estimates are those we believe require our most
significant judgments about the effect of matters that are inherently
uncertain. A discussion of our critical accounting estimates, the underlying
judgments and uncertainties used to make them and the likelihood that
materially different estimates would be reported under different conditions or
using different assumptions is as follows:
Ship Accounting
We make several critical accounting estimates with respect to our ship
accounting including ship improvement costs, estimated useful lives and
residual values.
We account for ship improvement costs, including replacements of certain
significant components and parts, by capitalizing those costs that we believe
add value to our ships and have a useful life greater than one year and
depreciating those improvements over their estimated remaining useful life.
The costs of repairs and maintenance, including those incurred when a ship is
taken out-of-service for scheduled maintenance, and minor improvement costs
and expenses, are charged to expense as incurred. If we change our assumptions
in making our determinations as to whether improvements to a ship add value,
the amounts we expense each year as repair and maintenance expense could
increase, which would be partially offset by a decrease in depreciation
expense, resulting from a reduction in capitalized costs.
In addition, the specifically identified or estimated cost and accumulated
depreciation of previously capitalized ship components are written-off upon
retirement, which may result in a loss on disposal that is also included in
other operating expenses. We do not have cost segregation studies performed to
specifically componentize our ships. In addition, since we do not separately
componentize our ships, we do not identify and track depreciation of original
ship components. Therefore, we typically have to estimate the net book value
of components that are retired, based primarily upon their replacement cost,
their age and their original estimated useful lives. Given the large size and
complexity of our ships, ship accounting estimates require considerable
judgment and are inherently uncertain.
In order to compute our ships' depreciation expense, we apply judgment to
determine their useful lives as well as their residual values. We have
estimated our ships' useful lives at 30 years and residual values at 15% of
our original ship cost. Our ships' useful life and residual value estimates
take into consideration the estimated weighted-average useful lives of the
ships' major component systems, such as hull, superstructure, main electric,
engines and cabins. We also take into consideration the impact of
technological changes, historical useful lives of similarly-built ships,
long-term cruise and vacation market conditions and regulatory changes,
including those related to the environment and climate change. We determine
the residual value of our ships based on our long-term estimates of their
resale value at the end of their useful lives to us but before the end of
their physical and economic lives to others, historical resale values of our
and other cruise ships as well as our expectations of the long-term viability
of the secondary cruise ship market. We review estimated useful lives and
residual values for reasonableness whenever events or circumstances
significantly change. During the pause of our guest cruise operations, we
disposed of ships for amounts significantly below their book values.
Management estimates that this trend will continue to normalize in the coming
years.
The IMO's 2023 Strategy on Reduction of GHG Emissions from Ships ("IMO
Strategy") strives to peak GHG emissions from international shipping as soon
as possible and to reach net zero GHG emissions on a well-to-wake basis by or
around 2050. The IMO Strategy includes checkpoints in 2030 and 2040 that seek
reductions in the absolute GHG emissions from international shipping by at
least 20% and 70%, respectively, compared to 2008. It also includes a target
of a 40% reduction in CO(2) emissions intensity by 2030 compared to 2008. The
EU has also proposed several regulations that will likely impact the cost of
fossil fuels and has recently adopted the inclusion of maritime shipping in
the EU's Emissions Trading System. We have established Climate Action Goals,
which include a GHG intensity reduction goal of 20% by 2030 from the 2019
baseline and we are pursuing our aspiration of net zero emissions by 2050.
Given a 30-year estimated useful life for our ships, our most recently
delivered vessels' lives will extend beyond this 2050 date. To provide a path
to net zero emissions, alternative low GHG emission fuels will be necessary
for the maritime industry; however, there are significant supply challenges
that must be resolved before viability is reached. We are closely monitoring
technology developments and partnering with organizations on research and
development to support our sustainability goals and aspirations. Our fleet's
engines are capable of being modified for use with certain alternative fuels
and we have completed tests on the use of marine biofuel blends on certain
ships in our fleet. In addition, and in support of our Climate Action Goals,
we invest in technologies, including the use of LNG powered cruise ships, the
installation of Advanced Air Quality Systems on board our ships to aid in the
reduction of sulfur emissions, the use of shore power, enabling ships to use
shoreside electric power where available while in port and various other
efficiency related upgrades intended to reduce our emissions. It is uncertain
how proposed and possible future regulatory changes related to the environment
and climate change and our aspiration of net zero emissions by 2050, may
impact our ships' useful lives and residual values and the impact is dependent
on future regulatory actions and technological advances. As of November 30,
2024, management concluded that there were no changes in our ship useful lives
and residual value estimates.
If materially different conditions existed, or if we materially changed our
assumptions of ship useful lives and residual values, then our depreciation
expense, loss on retirement of ship components and net book value of our ships
would be materially different. Our 2024 ship depreciation expense would have
increased by approximately:
• $51 million assuming we had reduced our estimated 30-year ship
useful life estimate by one year at the time we took delivery or acquired each
of our ships
• $260 million assuming we had estimated our ships to have no
residual value
We believe that the estimates we made for ship accounting purposes are
reasonable and our methods are consistently applied in all material respects
and result in depreciation expense that is based on a rational and systematic
method to equitably allocate the costs of our ships to the periods during
which we use them.
Valuation of Ships
We review our ships for impairment whenever events or changes in circumstances
indicate that the carrying value of a ship may not be recoverable. When an
impairment review is appropriate, such as an expected sale of a ship before
the end of its useful life, impairment reviews of our ships require us to make
significant estimates. We evaluate ship asset impairments at the individual
ship level which is the lowest level for which identifiable cash flows are
largely independent of the cash flows of other assets and liabilities. If
estimated future cash flows are less than the carrying value of a ship, an
impairment charge is recognized to the extent its carrying value exceeds its
estimated fair value.
The estimation of a ship's fair value includes numerous assumptions that are
subject to various risks and uncertainties. The principal assumption used in
determining the fair value of our ships tested for impairment in 2022 was the
estimated sales proceeds.
We determined the fair value of these ships based on their respective
estimated selling values, for those ships expected to be disposed of, or
estimated discounted future cash flows and comparable market transactions.
Where estimated future cash flows are used to estimate the recoverable value
of a ship, the cash flows include estimated regulatory costs, including those
related to proposed regulations, which are likely to impact costs and capital
expenditures, including those expected to meet our 2030 Climate Action Goals.
Refer to our consolidated financial statements for additional discussion of
our property and equipment policy and ship impairment reviews.
We believe that we have made reasonable estimates.
Contingencies
We periodically assess the potential liabilities related to any lawsuits or
claims brought against us, as well as for other known unasserted claims,
including environmental, legal, regulatory and guest and crew matters. While
it is typically very difficult to determine the timing and ultimate outcome of
these matters, we use our best judgment to determine the appropriate amounts
to record in our consolidated financial statements.
We accrue a liability and establish a reserve when we believe a loss is
probable and the amount of the loss can be reasonably estimated. In assessing
probable losses, we make estimates of the amount of probable insurance
recoveries, if any, which are recorded as assets where appropriate. Such
accruals and reserves are typically based on developments to date,
management's estimates of the outcomes of these matters, our experience in
contesting, litigating and settling other similar matters, historical claims
experience, actuarially determined estimates of liabilities and any related
insurance coverage.
Given the inherent uncertainty related to the eventual outcome of these
matters and potential insurance recoveries, it is possible that all or some of
these matters may be resolved for amounts materially different from any
provisions or disclosures that we may have made. In addition, as new
information becomes available, we may need to reassess amounts accrued related
to our contingencies. All such changes in our estimates could materially
impact our results of operations and financial position.
Refer to our consolidated financial statements for additional discussion of
contingencies.
Known Trends and Uncertainties
• We believe the volatility in the cost of fuel is reasonably
likely to continue to impact our profitability in both the short and
long-term.
• We believe the increasing global focus on climate change,
including the reduction of GHG emissions and new and evolving regulatory
requirements, is reasonably likely to have a material negative impact on our
future financial results. We became subject to the EU Emissions Trading System
("ETS") on January 1, 2024, which includes a three-year phase-in period. Refer
to XVIII. Governmental Regulations.
Results of Operations
We have historically earned substantially all of our cruise revenues from the
following:
• Sales of passenger cruise tickets and, in some cases, the sale of air
and other transportation to and from airports near our ships' home ports and
cancellation fees. The cruise ticket price typically includes the following:
• Accommodations
• Most meals, including snacks at numerous venues
• Access to amenities such as swimming pools, water slides, water
parks, whirlpools, a health club and sun decks
• Child care and supervised youth programs
• Entertainment, such as theatrical and comedy shows, live music
and nightclubs
• Visits to multiple destinations
• Sales of onboard goods and services not included in the cruise ticket
price. This generally includes the following:
• Beverage sales • Internet and communication services
• Casino gaming • Full service spas
• Shore excursions • Specialty restaurants
• Retail sales • Art sales
• Photo sales • Laundry and dry cleaning services
These goods and services are provided either directly by us or by independent
concessionaires, from which we receive either a percentage of their revenues
or a fee. Concession revenues do not have direct expenses because the costs
and services incurred for concession revenues are borne by our
concessionaires. In 2024, we earned 34% of our cruise revenues from onboard
and other revenue goods and services.
We earn our tour and other revenues from our hotel and transportation
operations and other revenues.
We incur cruise operating expenses for the following:
• The costs of passenger cruise bookings, which include travel agent
commissions, cost of air and other transportation, port fees, taxes, and
charges that directly vary with guest head counts and credit and debit card
fees
• Onboard and other cruise costs, which include the costs of beverage
sales, costs of shore excursions, costs of retail sales, internet and
communication costs, credit and debit card fees, other onboard costs, costs of
cruise vacation protection programs and pre- and post-cruise land packages
• Payroll and related costs, which include the costs of officers and crew
in bridge, engineering and hotel operations. Substantially all costs
associated with our shoreside personnel are included in selling and
administrative expenses
• Fuel costs, which include fuel delivery costs and European Union
Allowance costs
• Food costs, which include both our guest and crew food costs
• Other ship operating expenses, which include port costs that do not vary
with guest head counts; repairs and maintenance, including minor improvements
and dry-dock expenses; hotel costs; entertainment; gains and losses on ship
sales; ship impairments; freight and logistics; insurance premiums and all
other ship operating expenses
We incur tour and other costs and expenses for our hotel and transportation
operations and other expenses.
Statistical Information
Years Ended November 30,
2024 2023 2022
Passenger Cruise Days ("PCDs") (in millions) (a) 100.5 91.4 54.6
Available Lower Berth Days ("ALBDs") (in millions) (b) (c) 95.6 91.3 72.5
Occupancy percentage (d) 105% 100% 75%
Passengers carried (in millions) 13.5 12.5 7.7
Fuel consumption in metric tons (in millions) 2.9 2.9 2.6
Fuel consumption in metric tons per thousand ALBDs 30.9 32.1 36.1
Fuel cost per metric ton consumed (excluding European Union Allowance) $665 $701 $830
Currencies (USD to 1)
AUD $0.66 $0.66 $0.70
CAD $0.73 $0.74 $0.77
EUR $1.09 $1.08 $1.06
GBP $1.28 $1.24 $1.25
Notes to Statistical Information
(a) PCD represents the number of cruise passengers on a voyage multiplied
by the number of revenue-producing ship operating days for that voyage.
(b) ALBD is a standard measure of passenger capacity for the period that
we use to approximate rate and capacity variances, based on consistently
applied formulas that we use to perform analyses to determine the main
non-capacity driven factors that cause our cruise revenues and expenses to
vary. 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) In 2024 compared to 2023, we had a 4.7% capacity increase in ALBDs
comprised of a 7.9% capacity increase in our NAA segment and a 0.5% capacity
decrease in our Europe segment.
Our NAA segment's capacity increase was caused by the following:
• Carnival Cruise Line 4,090-passenger capacity ship that
transferred from Costa Cruises and entered into service in May 2023
• Seabourn 260-passenger capacity ship that entered into service
in July 2023
• Carnival Cruise Line 5,360-passenger capacity ship that entered
into service in December 2023
• Princess Cruises 4,310-passenger capacity ship that entered into
service in February 2024
• Carnival Cruise Line 4,130-passenger capacity ship that
transferred from Costa Cruises and entered into service in April 2024
The increase in our NAA segment's capacity was partially offset by a Seabourn
460-passenger capacity ship that was removed from service in September 2024.
Our Europe segment's capacity decrease was caused by the following:
• Costa Cruises 4,090-passenger capacity ship that transferred to
Carnival Cruise Line in March 2023
• AIDA Cruises 1,270-passenger capacity ship that was removed from
service in November 2023
• Costa Cruises 4,240-passenger capacity ship that transferred to
Carnival Cruise Line and was removed from Costa Cruises' fleet in February
2024
• The Red Sea rerouting as certain ships repositioned without
guests
The decrease in our Europe segment's capacity was partially offset by the
following:
• The return to service of two ships as part of the completion of
our return to guest cruise operations
• P&O Cruises (UK) 5,280-passenger capacity ship that entered
into service in December 2022
• Cunard 2,960-passenger capacity ship that entered into service
in May 2024
(d) 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.
2024 Compared to 2023
The discussion below compares the results of operations for the year ended
November 30, 2024 to the year ended November 30, 2023. This discussion should
be read in conjunction with the consolidated financial statements and the
notes thereto included elsewhere in this annual report. For a comparison of
the Company's results of operations for the year ended November 30, 2023 to
the year ended November 30, 2022, see "Item 7, Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the Company's
Annual Report on Form 10-K for the year ended November 30, 2023, which was
filed with the U.S. Securities and Exchange Commission on January 26, 2024.
Revenues
Consolidated
Passenger ticket revenues made up 66% of our 2024 total revenues. Passenger
ticket revenues increased by $2.4 billion, or 17%, to $16.5 billion in 2024
from $14.1 billion in 2023.
This increase was caused by:
• $988 million - higher ticket prices driven by continued
strength in demand
• $705 million - 5.1 percentage point increase in occupancy
• $691 million - 4.7% capacity increase in ALBDs
• $86 million - net favorable foreign currency translational
impact
These increases were partially offset by a decrease of $60 million in other
passenger revenue.
The remaining 34% of 2024 total revenues was comprised of onboard and other
revenues, which increased by $1.0 billion, or 14%, to $8.6 billion in 2024
from $7.5 billion in 2023.
This increase was driven by:
• $422 million - 4.7% capacity increase in ALBDs
• $286 million - 5.1 percentage point increase in occupancy
• $264 million - higher onboard spending by our guests
NAA Segment
Passenger ticket revenues made up 63% of our NAA segment's 2024 total
revenues. Passenger ticket revenues increased by $1.5 billion, or 16%, to
$10.6 billion in 2024 from $9.1 billion in 2023.
This increase was caused by:
• $717 million - 7.9% capacity increase in ALBDs
• $609 million - higher ticket prices driven by continued
strength in demand
• $241 million - 2.7 percentage point increase in occupancy
These increases were partially offset by a decrease of $64 million in other
passenger revenue.
The remaining 37% of our NAA segment's 2024 total revenues were comprised of
onboard and other revenues, which increased by $753 million, or 14%, to $6.2
billion in 2024 from $5.5 billion in 2023.
This increase was caused by:
• $430 million - 7.9% capacity increase in ALBDs
• $191 million - higher onboard spending by our guests
• $145 million - 2.7 percentage point increase in occupancy
Europe Segment
Passenger ticket revenues made up 77% of our Europe segment's 2024 total
revenues. Passenger ticket revenues increased by $945 million, or 19%, to
$5.9 billion in 2024 from $5.0 billion in 2023.
This increase was driven by:
• $463 million - 8.8 percentage point increase in occupancy
• $379 million - higher ticket prices driven by continued
strength in demand
• $87 million - net favorable foreign currency translational
impact
These increases were partially offset by a 0.5% capacity decrease in ALBDs,
representing $26 million.
The remaining 23% of our Europe segment's 2024 total revenues were comprised
of onboard and other revenues, which increased by $231 million, or 15%, to
$1.8 billion in 2024 from $1.5 billion in 2023.
This increase was driven by:
• $142 million - 8.8 percentage point increase in occupancy
• $72 million - higher onboard spending by our guests
Costs and Expenses
Consolidated
Operating expenses increased by $1.3 billion, or 9.2%, to $15.6 billion in
2024 from $14.3 billion in 2023.
This increase was caused by:
• $731 million - 4.7% capacity increase in ALBDs
• $333 million - higher commissions, transportation costs, and
other expenses driven by higher commission on increased ticket pricing and an
increase in the number of guests
• $144 million - higher onboard and other cost of sales driven by
higher onboard revenues
• $139 million - 5.1 percentage point increase in occupancy
• $63 million - higher repair and maintenance expenses (including
dry-dock expenses)
• $59 million - net unfavorable foreign currency translational
impact
• $47 million - decreases in gains on ship sales realized in 2024
compared to 2023
• $36 million - higher port expenses
These increases were partially offset by:
• $89 million - lower fuel consumption per ALBD
• $58 million - lower fuel prices
• $23 million - change in pension valuation
Selling and administrative expenses increased by $302 million, or 10%, to $3.3
billion in 2024 from $2.9 billion in 2023. This increase was driven by higher
compensation expense, increased investment in advertising and higher
information technology expense.
Depreciation and amortization expenses increased by $187 million, or 7.9%, to
$2.6 billion in 2024 from $2.4 billion in 2023. This increase was driven by
capacity increases, fleet enhancements and investments in shoreside assets for
our NAA segment.
NAA Segment
Operating expenses increased by $968 million, or 10%, to $10.6 billion in 2024
from $9.6 billion in 2023.
This increase was caused by:
• $753 million - 7.9% capacity increase in ALBDs
• $160 million - higher commissions, transportation costs, and
other expenses driven by higher commission on increased ticket pricing and an
increase in the number of guests
• $81 million - higher onboard and other cost of sales driven by
higher onboard revenues
• $76 million - higher repair and maintenance expenses (including
dry-dock expenses)
• $46 million - 2.7 percentage point increase in occupancy
These increases were partially offset by:
• $86 million - lower fuel consumption per ALBD
• $50 million - lower fuel prices
Selling and administrative expenses increased by $199 million, or 11%, to
$2.0 billion in 2024 from $1.8 billion in 2023. This increase was driven by
higher compensation expense, increased investment in advertising and higher
information technology expense.
Depreciation and amortization expenses increased by $168 million, or 11%, to
$1.7 billion in 2024 from $1.5 billion in 2023.
This increase was caused by:
• $117 million - 7.9% capacity increase in ALBDs
• $51 million - fleet enhancements and investments in shoreside
assets
Europe Segment
Operating expenses increased by $336 million, or 7.6%, to $4.7 billion in
2024 from $4.4 billion in 2023.
This increase was caused by:
• $174 million - higher commissions, transportation costs, and
other expenses driven by an increase in the number of guests
• $92 million - 8.8 percentage point increase in occupancy
• $63 million - higher onboard and other cost of sales driven by
higher onboard revenues
• $62 million - net unfavorable foreign currency translational
impact
• $47 million - nonrecurrence of gains on sale of three Europe
segment ships in 2023
These increases were partially offset by a $23 million change in pension
valuation.
Selling and administrative expenses increased by $85 million, or 9.7%, to
$961 million in 2024 from $876 million in 2023.
Depreciation and amortization expenses increased by $8 million, or 1.2%, to
$676 million in 2024 from $668 million in 2023.
Operating Income
Our consolidated operating income increased by $1.6 billion to $3.6 billion
in 2024 from $2.0 billion in 2023. Our NAA segment's operating income
increased by $879 million to $2.6 billion in 2024 from $1.8 billion in
2023, and our Europe segment's operating income increased by $747 million to
$1.3 billion in 2024 from $593 million in 2023. These changes were primarily
due to the reasons discussed above.
Nonoperating Income (Expense)
Interest expense, net of capitalized interest, decreased by $311 million, or
15%, to $1.8 billion in 2024 from $2.1 billion in 2023. The decrease was
substantially all due to a decrease in total debt and lower average interest
rates.
Debt extinguishment and modification costs decreased by $32 million, or 28%,
to $79 million in 2024 from $111 million in 2023 as a result of debt
transactions occurring during the respective periods.
Other income (expense), net increased by $157 million to $83 million in 2024
from ($75) million in 2023. The increase primarily relates to a non-recurring
favorable result related to litigation.
Liquidity, Financial Condition and Capital Resources
As of November 30, 2024, we had $4.2 billion of liquidity including $1.2
billion of cash and cash equivalents and $2.9 billion of borrowings available
under our multi-currency revolving credit facility ("Revolving Facility"). In
addition, we had $7.8 billion of undrawn export credit facilities to fund
ship deliveries planned through 2033. We will continue to pursue various
opportunities to repay portions of our existing indebtedness and refinance
future debt maturities to extend maturity dates and reduce interest expense.
Refer to Note 5 - "Debt" of the consolidated financial statements and Funding
Sources below for additional details.
We had a working capital deficit of $8.2 billion as of November 30, 2024
compared to a working capital deficit of $6.2 billion as of November 30, 2023.
The increase in working capital deficit was caused by increases in customer
deposits and accrued liabilities and other and decreases in the current
portion of long-term debt, cash and cash equivalents and prepaid expenses and
other. We operate with a substantial working capital deficit. This deficit is
mainly attributable to the fact that, under our business model, substantially
all of our passenger ticket receipts are collected in advance of the
applicable sailing date. These advance passenger receipts generally remain a
current liability on our balance sheet until the sailing date. The cash
generated from these advance receipts is used interchangeably with cash on
hand from other sources, such as our borrowings and other cash from
operations. 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 $6.4 billion and $6.1
billion of customer deposits as of November 30, 2024 and 2023. We have
agreements with a number of credit card processors that transact customer
deposits related to our cruise vacations. Certain of these agreements allow
the credit card processors to request, under certain circumstances, that we
provide a capped reserve fund in cash. As of November 30, 2024, we were not
required to maintain any reserve funds. In addition, we have a relatively low
level of accounts receivable and limited investment in inventories.
Sources and Uses of Cash
Operating Activities
Our business provided $5.9 billion of net cash flows from operating activities
during 2024, an increase of $1.6 billion, compared to $4.3 billion provided in
2023. This was caused by cash provided by the release of $0.8 billion credit
card reserve funds (included in the change in prepaid expenses and other
assets) and our net income position of $1.9 billion in 2024 compared to our
net loss position of $74 million in 2023, partially offset by a decrease in
other working capital changes.
Investing Activities
During 2024, net cash used in investing activities was $4.5 billion. This was
caused by:
• Capital expenditures of $4.6 billion primarily attributable to
the delivery of two NAA segment ships, one Europe segment ship and
developments in our port destinations and exclusive islands
• Proceeds of $58 million primarily from the sale of an NAA
segment ship
During 2023, net cash used in investing activities was $2.8 billion. This was
driven by:
• Capital expenditures of $3.3 billion with the majority
attributable to the delivery of one Europe segment ship and one NAA segment
ship
• Proceeds from sales of three Europe segment ships, one NAA
segment ship and other totaling $340 million
Financing Activities
During 2024, net cash used in financing activities of $2.6 billion was caused
by:
• Repayments of $5.4 billion of long-term debt
• Debt issuance costs of $203 million
• Debt extinguishment costs of $41 million
• Issuances of $3.1 billion of long-term debt
During 2023, net cash used in financing activities of $5.1 billion was driven
by:
• Repayments of $200 million of short-term borrowings
• Repayments of $5.9 billion of long-term debt and refinancing of
$1.8 billion of long-term debt to extend maturities
• Issuances of $3.0 billion of long-term debt
• Debt issuance costs of $131 million
• Debt extinguishment costs of $79 million
• Proceeds from issuance of $22 million of Carnival Corporation
common stock and purchases of $20 million of Carnival plc ordinary shares
under our Stock Swap Program
For our cash flow activities for the fiscal year ended November 30, 2022, see
"Item 7, Management's Discussion and Analysis of Financial Condition and
Results of Operations" in our Annual Report on Form 10-K for the year ended
November 30, 2023, which was filed with the U.S. Securities and Exchange
Commission on January 26, 2024.
Material Cash Requirements
Payments Due by
(in millions) 2025 2026 2027 2028 2029 Thereafter Total
Debt (a) $2,969 $3,991 $6,016 $9,534 $4,706 $6,495 $33,712
Newbuild capital expenditures (b) 893 423 1,302 1,263 1,502 3,182 8,565
Total $3,862 $4,414 $7,318 $10,797 $6,208 $9,677 $42,277
(a) Includes principal as well as estimated interest payments and does not
include the impact of any future possible refinancings. Excludes undrawn
export credits.
(b) As of November 30, 2024, we have undrawn export credit facilities of
$7.8 billion which fund a portion of our newbuild contractual commitments.
Funding Sources
As of November 30, 2024, we had $4.2 billion of liquidity including $1.2
billion of cash and cash equivalents and $2.9 billion of borrowings available
under our Revolving Facility. In addition, we had $7.8 billion of undrawn
export credit facilities to fund ship deliveries planned through 2033. 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) 2025 2026 2027 2028 2029 Thereafter
Future export credit facilities at November 30, 2024 $0.7 $- $1.2 $1.2 $1.6 $3.1
Our export credit facilities contain various financial covenants as described
in Note 5 - "Debt." At November 30, 2024, we were in compliance with the
applicable covenants under our debt agreements.
Quantitative and Qualitative Disclosures About Market Risk.
For a discussion of our hedging strategies and market risks, see the
discussion below and the consolidated financial statements.
Fuel Price Risks
Substantially all our exposure to market risk for changes in fuel prices
relates to the consumption of fuel on our ships.
Foreign Currency Exchange Rate Risks
Operational Currency Risks
Our operations primarily utilize the U.S. dollar, Euro, Sterling or the
Australian dollar as their functional currencies. Our operations also have
revenue and expenses denominated in non-functional currencies. Movements in
foreign currency exchange rates will affect our consolidated financial
statements.
Investment Currency Risks
The foreign currency exchange rates were as follows:
November 30,
USD to 1: 2024 2023
AUD $0.65 $0.66
CAD $0.71 $0.74
EUR $1.06 $1.10
GBP $1.27 $1.27
If the November 30, 2023 currency exchange rates had been used to translate
our November 30, 2024 non-U.S. dollar functional currency operations' assets
and liabilities (instead of the November 30, 2024 U.S. dollar exchange rates),
our total assets would have been higher by $468 million and our total
liabilities would have been higher by $408 million.
Newbuild Currency Risks
At November 30, 2024, our newbuild currency exchange rate risk primarily
relates to euro-denominated newbuild contract payments, which represent a
total commitment of $8.6 billion and relate to newbuilds scheduled to be
delivered to non-euro functional currency brands. The functional currency cost
of each of these ships will increase or decrease based on changes in the
exchange rates until the payments are made under the shipbuilding contract. We
may utilize foreign currency derivatives to mitigate some of this foreign
currency exchange rate risk. Based on a 1% change in euro to U.S. dollar
exchange rates as of November 30, 2024, the remaining cost of these ships
would have a corresponding change of $86 million.
Interest Rate Risks
The composition of our debt, interest rate swaps and cross currency swaps was
as follows:
November 30, 2024
Fixed rate 60%
EUR fixed rate 23%
Floating rate 7%
EUR floating rate 10%
At November 30, 2024, we had an interest rate swap that effectively changed
$11 million of EURIBOR-based floating rate euro debt to fixed rate euro debt.
We also had interest rate swap agreements which effectively changed
$1.0 billion at November 30, 2024 of SOFR-based floating rate USD debt to
fixed rate USD debt. Based on a 100 basis point change in the market interest
rates, our annual interest expense on floating rate debt, including the effect
of our interest rate swaps, will change by approximately $48 million.
Financial Statements and Supplementary Data.
CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(in millions, except per share data)
Years Ended November 30,
2024 2023 2022
Revenues
Passenger ticket $16,463 $14,067 $7,022
Onboard and other 8,558 7,526 5,147
25,021 21,593 12,168
Operating Expenses
Commissions, transportation and other 3,232 2,761 1,630
Onboard and other 2,678 2,375 1,528
Payroll and related 2,464 2,373 2,181
Fuel 2,007 2,047 2,157
Food 1,457 1,335 863
Ship and other impairments - - 440
Other operating 3,801 3,426 2,958
Cruise and tour operating expenses 15,638 14,317 11,757
Selling and administrative 3,252 2,950 2,515
Depreciation and amortization 2,557 2,370 2,275
21,447 19,637 16,547
Operating Income (Loss) 3,574 1,956 (4,379)
Nonoperating Income (Expense)
Interest income 93 233 74
Interest expense, net of capitalized interest (1,755) (2,066) (1,609)
Debt extinguishment and modification costs (79) (111) (1)
Other income (expense), net 83 (75) (165)
(1,659) (2,018) (1,701)
Income (Loss) Before Income Taxes 1,915 (62) (6,080)
Income Tax Benefit (Expense), Net 1 (13) (14)
Net Income (Loss) $1,916 $(74) $(6,093)
Earnings Per Share
Basic $1.50 $(0.06) $(5.16)
Diluted $1.44 $(0.06) $(5.16)
The accompanying notes are an integral part of these consolidated financial
statements.
CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in millions)
Years Ended November 30,
2024 2023 2022
Net Income (Loss) $1,916 $(74) $(6,093)
Items Included in Other Comprehensive Income (Loss)
Change in foreign currency translation adjustment (3) 52 (503)
Other (34) (8) 22
Other Comprehensive Income (Loss) (36) 44 (481)
Total Comprehensive Income (Loss) $1,879 $(30) $(6,574)
The accompanying notes are an integral part of these consolidated financial
statements.
CARNIVAL CORPORATION & PLC
CONSOLIDATED BALANCE SHEETS
(in millions, except par values)
November 30,
2024 2023
ASSETS
Current Assets
Cash and cash equivalents $1,210 $2,415
Trade and other receivables, net 590 556
Inventories 507 528
Prepaid expenses and other 1,070 1,767
Total current assets 3,378 5,266
Property and Equipment, Net 41,795 40,116
Operating Lease Right-of-Use Assets, Net 1,368 1,265
Goodwill 579 579
Other Intangibles 1,163 1,169
Other Assets 775 725
$49,057 $49,120
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $1,538 $2,089
Current portion of operating lease liabilities 163 149
Accounts payable 1,133 1,168
Accrued liabilities and other 2,358 2,003
Customer deposits 6,425 6,072
Total current liabilities 11,617 11,481
Long-Term Debt 25,936 28,483
Long-Term Operating Lease Liabilities 1,239 1,170
Other Long-Term Liabilities 1,012 1,105
Contingencies and Commitments
Shareholders' Equity
Carnival Corporation common stock, $0.01 par value; 1,960 shares authorized; 13 12
1,294 shares issued at 2024 and 1,250 shares issued at 2023
Carnival plc ordinary shares, $1.66 par value; 217 shares issued at 2024 and 361 361
2023
Additional paid-in capital 17,155 16,712
Retained earnings 2,101 185
Accumulated other comprehensive income (loss) ("AOCI") (1,975) (1,939)
Treasury stock, 130 shares at 2024 and 2023 of Carnival Corporation and 73 (8,404) (8,449)
shares at 2024 and 2023 of Carnival plc, at cost
Total shareholders' equity 9,251 6,882
$49,057 $49,120
The accompanying notes are an integral part of these consolidated financial
statements.
CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Years Ended November 30,
2024 2023 2022
OPERATING ACTIVITIES
Net income (loss) $1,916 $(74) $(6,093)
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities
Depreciation and amortization 2,557 2,370 2,275
Impairments - 21 470
(Gain) loss on debt extinguishment 76 98 1
(Income) loss from equity-method investments (9) 13 38
Share-based compensation 62 53 101
Amortization of discounts and debt issue costs 141 161 171
Non-cash lease expense 142 145 148
Gain on sales of ships (41) (88) (7)
Greenhouse gas regulatory expense 46 - -
Other 71 56 65
4,963 2,756 (2,832)
Changes in operating assets and liabilities
Receivables (49) (180) (171)
Inventories 9 (85) (95)
Prepaid expenses and other assets 352 397 (874)
Accounts payable (26) 77 283
Accrued liabilities and other 167 147 341
Customer deposits 507 1,169 1,679
Net cash provided by (used in) operating activities 5,923 4,281 (1,670)
INVESTING ACTIVITIES
Purchases of property and equipment (4,626) (3,284) (4,940)
Proceeds from sales of ships and other property and equipment 58 340 70
Purchase of short-term investments - - (315)
Proceeds from maturity of short-term investments - - 515
Other 34 134 (97)
Net cash provided by (used in) investing activities (4,535) (2,810) (4,767)
FINANCING ACTIVITIES
Repayments of short-term borrowings - (200) (2,590)
Principal repayments of long-term debt (5,436) (7,660) (2,075)
Debt issuance costs (203) (131) (153)
Debt extinguishment costs (41) (79) (1)
Proceeds from issuance of long-term debt 3,095 2,961 7,209
Proceeds from issuance of common stock - 5 1,180
Proceeds from issuance of common stock under the Stock Swap Program - 22 95
Purchase of treasury stock under the Stock Swap Program - (20) (87)
Other 1 13 (1)
Net cash provided by (used in) financing activities (2,584) (5,089) 3,577
Effect of exchange rate changes on cash, cash equivalents and restricted cash (8) 17 (79)
Net increase (decrease) in cash, cash equivalents and restricted cash (1,204) (3,601) (2,940)
Cash, cash equivalents and restricted cash at beginning of year 2,436 6,037 8,976
Cash, cash equivalents and restricted cash at end of year $1,231 $2,436 $6,037
The accompanying notes are an integral part of these consolidated financial
statements.
CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(in millions)
Common Ordinary Additional Retained AOCI Treasury Total
stock shares paid-in earnings stock shareholders'
capital equity
At November 30, 2021 $11 $361 $15,292 $6,448 $(1,501) $(8,466) $12,144
Net income (loss) - - - (6,093) - - (6,093)
Other comprehensive income (loss) - - - - (481) - (481)
Issuances of common stock, net 1 - 1,178 - - - 1,180
Issuance of Convertible Notes - - 229 - - - 229
Purchases and issuances under the Stock Swap Program, net - - 95 - - (87) 8
Issuance of treasury shares for vested share-based awards - - - (85) - 85 -
Share-based compensation and other - - 79 (1) - - 78
At November 30, 2022 12 361 16,872 269 (1,982) (8,468) 7,065
Change in accounting principle (a) - - (229) (10) - - (239)
Net income (loss) - - - (74) - - (74)
Other comprehensive income (loss) - - - - 44 - 44
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 - - 79 - - (2) 78
At November 30, 2023 12 361 16,712 185 (1,939) (8,449) 6,882
Net income (loss) - - - 1,916 - - 1,916
Other comprehensive income (loss) - - - - (36) - (36)
Conversion of Convertible Notes - - 414 - - - 415
Issuance of treasury shares for vested share-based awards - - (47) - - 47 -
Share-based compensation and other - - 76 - - (2) 75
At November 30, 2024 $13 $361 $17,155 $2,101 $(1,975) $(8,404) $9,251
(a) We adopted the provisions of Debt - Debt with Conversion and Other
Options and Derivative and Hedging - Contracts in Entity's Own Equity on
December 1, 2022.
The accompanying notes are an integral part of these consolidated financial
statements.
CARNIVAL CORPORATION & PLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - General
Description of Business
Carnival Corporation was incorporated in Panama in 1974 and Carnival plc was
incorporated in England and Wales in 2000. Together with their consolidated
subsidiaries, they are referred to collectively in these consolidated
financial statements and elsewhere in this 2024 Annual Report as "Carnival
Corporation & plc," "our," "us" and "we." The consolidated financial
statements include the accounts of Carnival Corporation and Carnival plc and
their respective subsidiaries.
We are the largest global cruise company, and among the largest leisure travel
companies, with a portfolio of world-class cruise lines - AIDA Cruises,
Carnival Cruise Line, Costa Cruises, Cunard, Holland America Line, P&O
Cruises (Australia), P&O Cruises (UK), Princess Cruises, and Seabourn.
In June 2024, we announced that we will sunset the P&O Cruises (Australia)
brand and fold its Australia operations into Carnival Cruise Line in March
2025.
DLC Arrangement
Carnival Corporation and Carnival plc operate a dual listed company ("DLC")
arrangement, whereby the businesses of Carnival Corporation and Carnival plc
are combined through a number of contracts and provisions in Carnival
Corporation's Articles of Incorporation and By-Laws and Carnival plc's
Articles of Association. The two companies operate as a single economic
enterprise with a single senior management team and identical Boards of
Directors, but each has retained its separate legal identity. Carnival
Corporation's shares of common stock are publicly traded on the New York Stock
Exchange ("NYSE") and Carnival plc's ordinary shares are publicly traded on
the London Stock Exchange. The Carnival plc American Depositary Shares are
traded on the NYSE.
The constitutional documents of each company provide that, on most matters,
the holders of the common equity of both companies effectively vote as a
single body. The Equalization and Governance Agreement between Carnival
Corporation and Carnival plc provides for the equalization of dividends and
liquidation distributions based on an equalization ratio and contains
provisions relating to the governance of the DLC arrangement. Because the
equalization ratio is 1 to 1, one share of Carnival Corporation common stock
and one Carnival plc ordinary share are generally entitled to the same
distributions.
Under deeds of guarantee executed in connection with the DLC arrangement, as
well as stand-alone guarantees executed since that time, each of Carnival
Corporation and Carnival plc have effectively cross guaranteed all
indebtedness and certain other monetary obligations of each other. Once the
written demand is made, the holders of indebtedness or other obligations may
immediately commence an action against the relevant guarantor.
Under the terms of the DLC arrangement, Carnival Corporation and Carnival plc
are permitted to transfer assets between the companies, make loans to or
investments in each other and otherwise enter into intercompany transactions.
In addition, the cash flows and assets of one company are required to be used
to pay the obligations of the other company, if necessary.
Given the DLC arrangement, we believe that providing separate financial
statements for each of Carnival Corporation and Carnival plc would not present
a true and fair view of the economic realities of their operations.
Accordingly, separate financial statements for Carnival Corporation and
Carnival plc have not been presented.
NOTE 2 - Summary of Significant Accounting Policies
Basis of Presentation
We consolidate entities over which we have control, as typically evidenced by
a voting control of greater than 50% or for which we are the primary
beneficiary, whereby we have the power to direct the most significant
activities and the obligation to absorb significant losses or receive
significant benefits from the entity. We do not separately present our
noncontrolling interests in the consolidated financial statements since the
amounts are immaterial. For affiliates we do not control but where significant
influence over financial and operating policies exists, as typically evidenced
by a voting control of 20% to 50%, the investment is accounted for using the
equity method.
For 2023, we reclassified $11 million from restricted cash to prepaid
expenses and other in the Consolidated Balance Sheets to conform to the
current year presentation.
Preparation of Consolidated Financial Statements
The preparation of our 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 in our consolidated financial
statements. We have made reasonable estimates and judgments of such items
within our consolidated financial statements and there may be changes to those
estimates in future periods. Actual results may differ from the estimates used
in preparing our consolidated financial statements. All material intercompany
balances and transactions are eliminated in consolidation.
Cash and Cash Equivalents
Cash and cash equivalents include investments with maturities of three months
or less at acquisition which are stated at cost and present insignificant risk
of changes in value.
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 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 and are less
allowances for expected credit losses.
Inventories
Inventories consist substantially of food, beverages, hotel supplies, fuel and
retail merchandise, which are all carried at the lower of cost or net
realizable value. Cost is determined using the weighted-average or first-in,
first-out methods and applied consistently between major categories of
inventory.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation and
any impairment charges. We capitalize interest as part of the cost of capital
projects incurred during construction. Depreciation is computed using the
straight-line method over our estimated useful lives of the assets to a
residual value, as a percentage of original cost, as follows:
Years Residual
Values
Ships 30 15%
Ship improvements 3-30 0%
Buildings and improvements 10-40 0%
Computer hardware and software 2-12 0%
Transportation equipment and other 3-20 0%
Leasehold improvements, including port facilities Shorter of the remaining lease term or related asset life (3-30) 0%
The cost of ships under construction includes progress payments for the
construction of new ships, as well as design and engineering fees, capitalized
interest, construction oversight costs and various owner supplied items. Any
liquidated damages received from shipyards are recorded as reductions to the
cost basis of the ship.
We have a capital program for the improvement of our ships and for asset
replacements to enhance the effectiveness and efficiency of our operations; to
comply with, or exceed, all relevant legal and statutory requirements related
to health, environment, safety, security and sustainability; and to gain
strategic benefits or provide improved product innovations to our guests. We
account for ship improvement costs, including replacements of certain
significant components and parts, by capitalizing those costs we believe add
value to our ships and have a useful life greater than one year and
depreciating those improvements over their estimated remaining useful life.
The costs of repairs and maintenance, including those incurred when a ship is
taken out-of-service for scheduled maintenance, and minor improvement costs
and expenses, are charged to expense as incurred.
In addition, specifically identified or estimated cost and accumulated
depreciation of previously capitalized ship components are written-off upon
retirement, which may result in a loss on disposal that is also included in
other operating expenses.
We have estimated our ships' useful lives at 30 years and residual values at
15% of our original ship cost. Our ships' useful life and residual value
estimates take into consideration the estimated weighted-average useful lives
of the ships' major component systems, such as hull, superstructure, main
electric, engines and cabins. We also take into consideration the impact of
technological changes, historical useful lives of similarly-built ships,
long-term cruise and vacation market conditions and regulatory changes,
including those related to the environment and climate change. We determine
the residual value of our ships based on our long-term estimates of their
resale value at the end of their useful lives to us but before the end of
their physical and economic lives to others, historical resale values of our
and other cruise ships as well as our expectations of the long-term viability
of the secondary cruise ship market. We review estimated useful lives and
residual values for reasonableness whenever events or circumstances
significantly change.
We evaluate ship asset impairments at the individual ship level which is the
lowest level for which identifiable cash flows are largely independent of the
cash flows of other assets and liabilities. We review our ships for impairment
whenever events or circumstances indicate that the carrying value of a ship
may not be recoverable. If estimated future cash flows are less than the
carrying value of a ship, an impairment charge is recognized to the extent its
carrying value exceeds its estimated fair value.
Leases
Substantially all of our leases for which we are the lessee are operating
leases of port facilities and real estate and are included within operating
lease right-of-use assets, net, long-term operating lease liabilities and
current portion of operating lease liabilities in our Consolidated Balance
Sheets. We determine if an arrangement is or contains a lease at the lease
inception date by evaluating whether the arrangement conveys the right to use
an identified asset and whether we obtain substantially all of the economic
benefits from and have the ability to direct the use of the asset.
We have port facilities and real estate lease agreements with lease and
non-lease components, and in such cases, we account for the components as a
single lease component.
We do not recognize lease assets and lease liabilities for any leases that
have an initial term of twelve months or less and do not include an option to
purchase the underlying asset that we are reasonably certain to exercise. For
some of our port facilities and real estate lease agreements, we have the
option to extend our current lease term by 1 to 10 years. Generally, we do not
include renewal options as a component of our present value calculation as we
are not reasonably certain that we will exercise the options.
As our leases do not have a readily determinable implicit rate, we estimate
the incremental borrowing rate ("IBR") to determine the present value of lease
payments. We apply judgment in determining the IBR including considering the
term of the lease, the currency in which the lease is denominated, and the
impact of collateral and our credit risk on the rate.
We recognize lease expense for our operating leases on a straight-line basis
over the lease term.
Goodwill and Other Intangibles
Goodwill represents the excess of the purchase price over the fair value of
identifiable net assets acquired in a business acquisition. We review our
goodwill for impairment as of July 31 every year, or more frequently if events
or circumstances dictate. All of our goodwill has been allocated to our
reporting units. The impairment review for goodwill allows us to first assess
qualitative factors to determine whether it is necessary to perform a more
detailed quantitative goodwill impairment test. We would perform the
quantitative test if our qualitative assessment determined it is
more-likely-than-not that a reporting unit's estimated fair value is less than
its carrying amount. We may also elect to bypass the qualitative assessment
and proceed directly to the quantitative test for any reporting unit. When
performing the quantitative test, if the estimated fair value of the reporting
unit exceeds its carrying value, no further analysis is required. However, if
the estimated fair value of the reporting unit is less than the carrying
value, goodwill is written down based on the difference between the reporting
unit's carrying amount and its fair value, limited to the amount of goodwill
allocated to the reporting unit. Judgment is required in estimating the fair
value of our reporting unit.
Trademarks represent substantially all of our other intangibles. Trademarks
are estimated to have an indefinite useful life and are not amortizable but
are reviewed for impairment at least annually and as events or circumstances
dictate. The impairment review for trademarks also allows us to first assess
qualitative factors to determine whether it is necessary to perform a more
detailed quantitative trademark impairment test. We would perform the
quantitative test if our qualitative assessment determined it was
more-likely-than-not that the trademarks are impaired. We may also elect to
bypass the qualitative assessment and proceed directly to the quantitative
test. Our trademarks would be considered impaired if their carrying value
exceeds their estimated fair value.
Emission Allowances
We became subject to the EU Emissions Trading System ("ETS") on January 1,
2024, which includes a three-year phase-in period. The ETS regulates emissions
through a "cap and trade" principle, where a cap is set on the total amount of
certain emissions that can be emitted and requires us to procure emission
allowances for certain emissions inside EU waters (as defined in the ETS).
Emission allowances are recorded at cost and are included in prepaid expenses
and other or other assets. Purchases of emission allowances are classified as
operating activities in our Consolidated Statements of Cash Flows. Emission
obligations are recorded when generated and are included in accrued
liabilities and other and other long-term liabilities. The funded portion of
the emission obligations are measured at the carrying value of the emission
allowances and the unfunded portion of emission obligations is measured at the
fair value of emission allowances necessary to settle. We record expense for
emissions in EU waters in fuel expense in the period incurred. Emission
allowances and obligations are derecognized when surrendered based on the
first-in, first-out method, and are non-cash activities.
Equity Method Investments
Equity method investments are initially recognized at cost and are included in
other assets in the Consolidated Balance Sheets. Our proportionate interest in
their results is included in other income (expense), net in the Consolidated
Statements of Income (Loss).
Debt and Debt Issuance Costs
Debt is recorded at initial fair value, which normally reflects the proceeds
received by us, net of debt issuance costs. Debt is subsequently stated at
amortized cost. Debt issuance costs, discounts and premiums are generally
amortized to interest expense using the straight-line method, which
approximates the effective interest method, over the term of the debt. Debt
issuance costs related to a recognized debt liability are presented in the
Consolidated Balance Sheets as a direct deduction from the carrying amount of
that debt liability, consistent with debt discounts. For our revolving
facility, and those export credit facilities not yet drawn, the related debt
issuance costs are deferred and recorded as an asset. Debt instruments are
evaluated for the existence of features that require separation and accounting
as a derivative. In our Consolidated Statements of Cash Flows, debt issuance
costs paid to lenders related to a recognized debt liability are netted
against the proceeds from the related long-term debt while debt issuance costs
paid to third parties, or related to undrawn credit facilities, are presented
separately within financing activities.
Derivatives and Other Financial Instruments
We have in the past and may in the future utilize derivative and
non-derivative financial instruments, such as foreign currency forwards,
options and swaps, foreign currency debt obligations and foreign currency cash
balances, to manage our exposure to fluctuations in certain foreign currency
exchange rates. We use interest rate swaps primarily to manage our interest
rate exposure to achieve a desired proportion of fixed and floating rate
debt. Our policy is to not use financial instruments for trading or other
speculative purposes.
All derivatives are recorded at fair value. If a derivative is designated as a
cash flow hedge, then the change in the fair value of the derivative is
recognized as a component of AOCI until the underlying hedged item is
recognized in earnings or the forecasted transaction is no longer
probable. If a derivative or a non-derivative financial instrument is
designated as a hedge of our net investment in a foreign operation, then
changes in the effective portion of the fair value of the financial instrument
are recognized as a component of AOCI to offset the change in the translated
value of the designated portion of net investment being hedged until the
investment is sold or substantially liquidated, while the impact attributable
to components excluded from the assessment of hedge effectiveness is recorded
in interest expense, net of capitalized interest, on a systematic and rational
basis. For derivatives that do not qualify for hedge accounting treatment, the
change in fair value is recognized in earnings.
We classify the fair value of all our derivative contracts as either current
or long-term, depending on the maturity date of the derivative contract. The
cash flows from derivatives treated as cash flow hedges are classified in our
Consolidated Statements of Cash Flows in the same category as the item being
hedged.
Derivative valuations are based on observable inputs such as interest rates
and commodity price curves, forward currency exchange rates, credit spreads,
maturity dates, volatilities, and cross currency basis spreads. We use the
income approach to value derivatives for foreign currency options and
forwards, interest rate swaps and cross currency swaps using observable market
data for all significant inputs and standard valuation techniques to convert
future amounts to a single present value amount, assuming that participants
are motivated but not compelled to transact.
Foreign Currency Translation and Transactions
These consolidated financial statements are presented in U.S. dollars. Each
foreign entity determines its functional currency by reference to its primary
economic environment. Our most significant foreign entities utilize the U.S.
dollar, Euro, Sterling or the Australian dollar as their functional
currencies. We translate the assets and liabilities of our foreign entities
that have functional currencies other than the U.S. dollar at exchange rates
in effect at the balance sheet date. Revenues and expenses of these foreign
entities are translated at the average rate for the period. Equity is
translated at historical rates and the resulting foreign currency translation
adjustments are included as a component of AOCI, which is a separate component
of shareholders' equity. Therefore, the U.S. dollar value of the non-equity
translated items in our consolidated financial statements will fluctuate from
period to period, depending on the changing value of the U.S. dollar versus
these currencies.
We execute transactions in a number of different currencies. At the date that
the transaction is recognized, each asset, liability, revenue, expense, gain
or loss arising from the transaction is measured and recorded in the
functional currency of the recording entity using the exchange rate in effect
at that date. At each balance sheet date, recorded monetary balances
denominated in a currency other than the functional currency are adjusted
using the exchange rate at the balance sheet date, with gains or losses
recorded in other income or other expense, unless such monetary balances have
been designated as hedges of net investments in our foreign entities. The net
gains or losses resulting from foreign currency transactions were not material
in 2024, 2023 and 2022. In addition, the unrealized gains or losses on our
long-term intercompany receivables and payables which are denominated in a
non-functional currency and which are not expected to be repaid in the
foreseeable future are recorded as foreign currency translation adjustments
included as a component of AOCI.
Revenue and Expense Recognition
Guest cruise deposits and advance onboard purchases are initially included in
customer deposits when received. Customer deposits are subsequently recognized
as cruise revenues, together with revenues from onboard and other activities,
and all associated direct costs and expenses of a voyage are recognized as
cruise costs and expenses, upon completion of voyages with durations of ten
nights or less and on a pro rata basis for voyages in excess of ten nights.
The impact of recognizing these shorter duration cruise revenues and costs and
expenses on a completed voyage basis versus on a pro rata basis is not
material. Certain of our product offerings are bundled and we allocate the
value of the bundled services and goods between passenger ticket revenues and
onboard and other revenues based upon the estimated standalone selling prices
of those goods and services. Future travel discount vouchers are included as a
reduction of cruise passenger ticket revenues when such vouchers are utilized.
Guest cancellation fees, when applicable, are recognized in passenger ticket
revenues at the time of cancellation.
Our sales to guests of air and other transportation to and from airports near
the home ports of our ships are included in passenger ticket revenues, and the
related costs of these services are included in prepaid expenses and other
when paid prior to the start of a voyage and are subsequently recognized in
transportation costs at the time of revenue recognition. The cost of prepaid
air and other transportation costs at November 30, 2024 was $219 million. The
proceeds that we collect from the sales of third-party shore excursions are
included in onboard and other revenues and the related costs are included in
onboard and other costs. The amounts collected on behalf of our onboard
concessionaires, net of the amounts remitted to them, are included in onboard
and other revenues as concession revenues. All of these amounts are recognized
on a completed voyage or pro rata basis as discussed above.
Fees, taxes and charges that vary with guest head counts are expensed in
commissions, transportation and other costs when the corresponding revenues
are recognized. The remaining portion of fees, taxes and charges are expensed
in other operating expenses when the corresponding revenues are recognized.
Revenues and expenses from our hotel and transportation operations, which are
included in our Tour and Other segment, are recognized at the time the
services are performed.
Customer Deposits
Our payment terms generally require an initial deposit to confirm a
reservation, with the balance due prior to the voyage. Cash received from
guests in advance of the cruise is recorded in customer deposits and in other
long-term liabilities on our Consolidated Balance Sheets. These amounts
include refundable deposits. We had total customer deposits of $6.8 billion
and $6.4 billion as of November 30, 2024 and 2023, which includes
approximately $25 million of unredeemed Future Cruise Credits ("FCCs") as of
November 30, 2024. At November 30, 2023, we had approximately $134 million of
unredeemed FCCs, of which $111 million were refundable. During 2024 and 2023,
we recognized revenues of $5.5 billion and $4.1 billion related to our
customer deposits as of November 30, 2023 and 2022. Our customer deposits
balance changes due to the seasonal nature of cash collections, which
typically results from higher ticket prices and occupancy levels during the
third quarter, the recognition of revenue, refunds of customer deposits and
foreign currency changes.
Contract Costs
We recognize incremental travel agent commissions and credit and debit card
fees incurred as a result of obtaining the ticket contract as assets when paid
prior to the start of a voyage. 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 of $336 million and $294 million as of
November 30, 2024 and 2023.
Insurance
We use a combination of insurance and self-insurance to cover a number of
risks including illness and injury to crew, guest injuries, pollution, other
third-party claims in connection with our cruise activities, damage to hull
and machinery for each of our ships, war risks, workers' compensation,
directors' and officers' liability, property damage and general liability for
shoreside third-party claims. We recognize insurance recoverables from
third-party insurers up to the amount of recorded losses at the time the
recovery is probable and upon settlement for amounts in excess of the recorded
losses. All of our insurance policies are subject to coverage limits,
exclusions and deductible levels. The liabilities associated with crew
illnesses and crew and guest injury claims, including all legal costs, are
estimated based on the specific merits of the individual claims or actuarially
estimated based on historical claims experience, loss development factors and
other assumptions.
Selling and Administrative Expenses
Selling expenses include a broad range of advertising, marketing and
promotional expenses. Advertising is charged to expense as incurred, except
for media production costs, which are expensed upon the first airing of the
advertisement. Selling expenses totaled $925 million in 2024, $851 million in
2023 and $744 million in 2022. Administrative expenses represent the costs of
our shoreside support, reservations and other administrative functions, and
include salaries and related benefits, professional fees and building
occupancy costs, which are typically expensed as incurred.
Share-Based Compensation
We recognize compensation expense for all share-based compensation awards
using the fair value method. For time-based share awards, we recognize
compensation cost ratably using the straight-line attribution method over the
expected vesting period or to the retirement eligibility date, if earlier than
the vesting period. For performance-based share awards, we estimate
compensation cost based on the probability of the performance condition being
achieved and recognize expense ratably using the straight-line attribution
method over the expected vesting period. If all or a portion of the
performance condition is not expected to be met, the appropriate amount of
previously recognized compensation expense is reversed and future compensation
expense is adjusted accordingly. We account for forfeitures as they occur.
Earnings Per Share
Basic earnings per share is computed by dividing net income (loss) by the
weighted-average number of shares outstanding during each period. Diluted
earnings per share is computed by dividing net income by the weighted-average
number of shares and common stock equivalents outstanding during each period
including the dilutive effect of convertible notes using the if-converted
method. For earnings per share purposes, Carnival Corporation common stock and
Carnival plc ordinary shares are considered a single class of shares since
they have equivalent rights.
Accounting Pronouncements
In September 2022, the Financial Accounting Standards Board ("FASB") issued
guidance, Liabilities-Supplier Finance Programs - Disclosure of Supplier
Finance Program Obligations. This guidance requires that a buyer in a supplier
finance program disclose sufficient information about the program to allow a
user of financial statements to understand the program's nature, activity
during the period, changes from period to period, and potential magnitude. On
December 1, 2023, we adopted this guidance using the retrospective method for
each period presented. The adoption of this guidance had no impact on our
consolidated financial statements and related disclosures.
In November 2023, the FASB issued guidance, Segment Reporting - Improvements
to Reportable Segment Disclosures. This guidance requires annual and interim
disclosure of significant segment expenses that are provided to the chief
operating decision maker ("CODM") as well as interim disclosures for all
reportable segments' profit or loss and assets. This guidance also requires
disclosure of the title and position of the CODM and an explanation of how the
CODM uses the reported measures of segment profit or loss in assessing segment
performance and deciding how to allocate resources. This guidance is required
to be adopted by us in 2025. We are currently evaluating the impact this
guidance will have on our consolidated financial statements and related
disclosures.
In December 2023, the FASB issued guidance, Income Taxes - Improvements to
Income Tax Disclosures. This guidance requires disaggregation of rate
reconciliation categories and income taxes paid by jurisdiction, as well as
other amendments relating to income tax disclosures. This guidance is required
to be adopted by us in 2026. We are currently evaluating the impact this
guidance will have on our consolidated financial statements and related
disclosures.
In November 2024, the FASB issued guidance, Income Statement - Reporting
Comprehensive Income - Expense Disaggregation Disclosures - Disaggregation of
Income Statement Expenses. This guidance requires annual and interim
disclosure of disaggregated information for certain costs and expenses. This
guidance is required to be adopted by us in 2028. We are currently evaluating
the impact this guidance will have on our consolidated financial statements
and related disclosures.
In November 2024, the FASB issued guidance, Debt - Debt with Conversion and
Other Options - Induced Conversions of Convertible Debt Instruments. This
guidance clarifies the requirements for determining whether certain
settlements of convertible debt instruments should be accounted for as induced
conversions or extinguishments. This guidance is required to be adopted by us
in 2027. We are currently evaluating the impact this guidance will have on our
consolidated financial statements.
NOTE 3 - Property and Equipment
November 30,
(in millions) 2024 2023
Ships and ship improvements $58,649 $55,026
Ships under construction 535 1,284
Other property and equipment 4,705 4,213
Total property and equipment 63,889 60,523
Less accumulated depreciation (22,094) (20,407)
$41,795 $40,116
Capitalized interest amounted to $61 million in 2024, $64 million in 2023 and
$48 million in 2022.
Sales of Ships
During 2024, we completed the sale of one North America and Australia ("NAA")
segment ship, which represents a passenger-capacity reduction of 2,000 berths.
We will continue to operate this ship under a bareboat charter agreement
through February 2025.
Refer to Note 10 - "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.
NOTE 4 - Equity Method Investments
At November 30, 2024 and 2023, we had a 49% and 40% noncontrolling interest in
Grand Bahama Shipyard Ltd. ("Grand Bahama"), a ship repair and maintenance
facility. During 2024, we acquired an additional 9% ownership interest in
Grand Bahama. As of November 30, 2024, our investment in Grand Bahama was
$45 million, consisting of $28 million in equity and a loan of $18 million.
As of November 30, 2023, our investment in Grand Bahama was $43 million,
consisting of $25 million in equity and a loan of $18 million. Grand Bahama
provided an immaterial amount of services to us in 2024, 2023 and 2022.
We have a 50% noncontrolling interest in Floating Docks S. de RL. ("Floating
Docks"), an entity that will purchase two floating drydocks and will then
lease them to Grand Bahama. As of November 30, 2024 and 2023 our investment in
Floating Docks was $81 million and $21 million. We have provided payment
guarantees on behalf of Floating Docks. As of November 30, 2024 and 2023, the
amounts outstanding under these guarantees were $37 million and $46 million.
In November 2024, we entered into an agreement to sell one-third of our
interest in Grand Bahama and Floating Docks. The closing is subject to
government approval. If approved, the sale will not have a material impact to
our consolidated financial statements.
We have a 45% noncontrolling interest in the White Pass & Yukon Route
("White Pass") that includes port, railroad and retail operations in Skagway,
Alaska. White Pass provided an immaterial amount of services to us in 2024,
2023 and 2022. In 2022, we evaluated whether our investment in White Pass was
other than temporarily impaired and performed an impairment assessment. As a
result of our assessment, we recognized impairment charges for 2022 of
$30 million in other income (expense), net. As of November 30, 2024, our
investment in White Pass was $58 million, consisting of $26 million in equity
and a loan of $32 million. As of November 30, 2023, our investment in White
Pass was $53 million, consisting of $21 million in equity and a loan of
$32 million.
During 2023, we completed the exit of our noncontrolling interest in Adora
Cruises Limited, formerly CSSC Carnival Cruise Shipping Limited, a China-based
cruise company ("Adora Cruises"), and recognized losses on exit of
$21 million within other income (expense).
Our proportionate interest in the results of our equity method investments is
not material.
NOTE 5 - Debt
November 30,
(in millions) Maturity Rate (a) 2024 2023
Secured Subsidiary Guaranteed
Notes
Notes Jun 2027 7.9% $192 $192
Notes (b) Aug 2027 9.9% - 623
Notes Aug 2028 4.0% 2,406 2,406
Notes Aug 2029 7.0% 500 500
Loans
EUR floating rate (b) Jun 2025 EURIBOR + 3.8% - 851
Floating rate Aug 2027 - Oct 2028 SOFR + 2.8% (c) 2,449 3,567
Total Secured Subsidiary Guaranteed 5,547 8,138
Senior Priority Subsidiary Guaranteed
Notes May 2028 10.4% 2,030 2,030
Unsecured Subsidiary Guaranteed
Notes
Convertible Notes Oct 2024 5.8% - 426
Notes Mar 2026 7.6% 1,351 1,351
EUR Notes (b) Mar 2026 7.6% - 550
Notes (b) Mar 2027 5.8% 2,722 3,100
Convertible Notes Dec 2027 5.8% 1,131 1,131
Notes May 2029 6.0% 2,000 2,000
EUR Notes Jan 2030 5.8% 528 -
Notes Jun 2030 10.5% 1,000 1,000
Loans
EUR floating rate (b) (d) Apr 2025 EURIBOR + 3.3% 211 678
Export Credit Facilities
Floating rate Dec 2031 SOFR + 1.2% (e) 514 583
Fixed rate Aug 2027 - Dec 2032 2.4 - 3.4% 2,370 2,756
EUR floating rate Mar 2025 - Nov 2034 EURIBOR + 0.2 - 0.8% 2,590 3,086
EUR fixed rate Feb 2031 - Sep 2037 1.1 - 4.0% 5,386 3,652
Total Unsecured Subsidiary Guaranteed 19,803 20,312
Unsecured Notes (No Subsidiary Guarantee)
Notes Jan 2028 6.7% 200 200
EUR Notes Oct 2029 1.0% 633 659
Total Unsecured Notes (No Subsidiary Guarantee) 833 859
Total Debt 28,213 31,339
Less: unamortized debt issuance costs and discounts (738) (768)
Total Debt, net of unamortized debt issuance costs and discounts 27,475 30,572
Less: current portion of long-term debt (1,538) (2,089)
Long-Term Debt $25,936 $28,483
(a) The reference rates, together with any applicable credit adjustment
spread, for substantially all of our variable debt have 0.0% to 0.75% floors.
(b) See "Debt Prepayments" below.
(c) As part of the repricing of our senior secured term loans, we amended
the loans' margin from 3.0% - 3.4% (inclusive of credit adjustment spread) to
2.8%. See "Repricing of senior secured term loans" below.
(d) The maturity of the principal amount of $211 million was extended
from April 2024 to April 2025.
(e) Includes applicable credit adjustment spread.
Carnival Corporation and/or Carnival plc is the primary obligor of all our
outstanding debt excluding the following:
• $2.9 billion under an undrawn $1.9 billion, €0.9 billion
and £0.1 billion multi-currency revolving credit facility ("Revolving
Facility") of Carnival Holdings (Bermuda) II Limited ("Carnival Holdings II"),
a subsidiary of Carnival Corporation
• $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
• $0.9 billion under an export credit facility of Sun Princess
Limited, a subsidiary of Carnival Corporation
• $0.2 billion under an export credit facility of Sun Princess II
Limited, a subsidiary of Carnival Corporation
All of our outstanding debt is issued or guaranteed by substantially the same
entities with the exception of the following:
• Our 2028 Senior Priority Notes, issued by Carnival Holdings,
which does not guarantee our other outstanding debt
• The export credit facilities of Sun Princess Limited and Sun
Princess II Limited, which do not guarantee our other outstanding debt
• The Revolving Facility of Carnival Holdings II, which does not
guarantee our other outstanding debt
As of November 30, 2024, the scheduled maturities of our debt are as follows:
(in millions)
Year Principal Payments
2025 $1,538
2026 2,683
2027 4,894
2028 8,726
2029 4,328
Thereafter 6,044
Total $28,213
Revolving Facility
As of November 30, 2024, Carnival Holdings II had $2.9 billion available for
borrowing under the Revolving Facility. Carnival Holdings II may continue to
borrow or otherwise utilize available amounts under the Revolving Facility
through August 2027, subject to the satisfaction of the conditions in the
facility.
Borrowings under the Revolving Facility bear interest at a rate of term SOFR,
in relation to any loan in U.S. dollars, EURIBOR, in relation to any loan in
euros, or daily compounding SONIA, in relation to any loan in sterling, plus a
margin based on the long-term credit ratings of Carnival Corporation. This
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 GHG
emissions goals. In addition, we are required to pay certain fees on the
aggregate unused commitments under the Revolving Facility.
During 2023, in connection with the Revolving Facility, Carnival Corporation
and Carnival plc contributed three unencumbered vessels with a net book value
of $2.9 billion on the date of contribution (the "Revolving Facility Subject
Vessels") to Carnival Holdings II with each of the vessels continuing to be
operated under one of the Carnival Corporation & plc brands.
Repricing of Senior Secured Term Loans
During 2024, we entered into amendments with the lender syndicate to reprice
$1.7 billion of our first-priority senior secured term loan facility maturing
in 2028 and $1.0 billion of our first-priority senior secured term loan
facility maturing in 2027, which are included within the total Secured
Subsidiary Guaranteed Loans balance in the debt table above. Subsequent to
November 30, 2024, we entered into further amendments with the lender
syndicate to reprice the outstanding principal amounts under these facilities
("Repriced Loans"). The Repriced Loans bear interest at a rate per annum equal
to SOFR with a 0.75% floor, plus a margin equal to 2.0%.
2030 Senior Unsecured Notes
During 2024, we issued $535 million aggregate principal amount of 5.8% senior
unsecured euro notes due 2030. We used the net proceeds from the issuance,
together with cash on hand, to redeem the outstanding principal amount of the
7.6% senior unsecured euro notes due 2026.
Debt Prepayments
During 2024, we made prepayments for the following debt instruments:
• Euro-denominated tranche of our first-priority senior secured
term loan facility maturing in 2025
• First-priority senior secured term loan facilities maturing in
2027 and 2028
• 9.9% second-priority secured notes due 2027
• 7.6% senior unsecured euro notes due 2026
• 5.8% senior unsecured notes due 2027
• Euro floating rate loan due 2026
The aggregate amount of these prepayments was $3.8 billion.
Export Credit Facility Borrowings
During 2024, we borrowed $2.4 billion under export credit facilities due in
semi-annual installments through 2037. As of November 30, 2024, we had
$7.8 billion of undrawn export credit facilities to fund ship deliveries
planned through 2033. As of November 30, 2024, the net book value of the
vessels, excluding ships under construction, subject to negative pledges
pursuant to export credit facilities was $18.5 billion.
Convertible Notes
On July 1, 2024, our 5.8% convertible senior notes due 2024 (the "2024
Convertible Notes") became convertible, at the option of the holders, at any
time prior to the close of business on September 27, 2024. Pursuant to the
terms of the indenture governing the 2024 Convertible Notes, we irrevocably
elected to settle conversions of the 2024 Convertible Notes during this period
in shares of Carnival Corporation common stock. Substantially all of the 2024
Convertible Notes were converted to shares of common stock, which resulted in
the issuance of approximately 41.5 million shares of common stock, and the
remaining principal balance was repaid at maturity on October 1, 2024.
In November 2022, we issued $1.1 billion aggregate principal amount of 5.8%
convertible senior notes due 2027 (the "2027 Convertible Notes" and, together
with the 2024 Convertible Notes, the "Convertible Notes"). The 2027
Convertible Notes mature on December 1, 2027, unless earlier repurchased or
redeemed by us or earlier converted in accordance with their terms prior to
the maturity date.
The 2027 Convertible Notes are convertible by holders, subject to the
conditions described within the indenture governing the 2027 Convertible
Notes, into cash, shares of Carnival Corporation common stock, or a
combination thereof, at our election. The 2027 Convertible Notes have an
initial conversion rate of approximately 75 shares of Carnival Corporation
common stock per $1,000 principal amount of notes, equivalent to an initial
conversion price of approximately $13.39 per share of common stock. The
initial conversion price of the 2027 Convertible Notes is subject to certain
anti-dilutive adjustments and may also increase if such 2027 Convertible Notes
are converted in connection with a tax redemption or certain corporate events
as described within the indenture governing the 2027 Convertible Notes.
Effective December 1, 2024, the 2027 Convertible Notes became convertible for
the period beginning December 1, 2024 and ending February 28, 2025. Refer to
Note 15 - "Supplemental Cash Flow Information" for additional detail on
transactions related to the 2027 Convertible Notes.
We may redeem the 2027 Convertible Notes, in whole but not in part, at any
time on or prior to the 40th scheduled trading day immediately before the
maturity date 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 2027 Convertible
Notes due to a change in tax laws, regulations or rulings or a change in the
official application, administration or interpretation thereof.
On or after December 5, 2025 and on or before the 40th scheduled trading day
immediately before the maturity date, we may redeem for cash all or part of
the 2027 Convertible Notes, at our option, if the last reported sale price of
Carnival Corporation's common stock exceeds 130% of the conversion price then
in effect for at least 20 trading days (whether or not consecutive), including
the trading day immediately preceding the date on which we provide notice of
redemption, during the 30 consecutive trading day period ending on, and
including, the trading day immediately preceding the date on which we provide
notice of redemption. The redemption price will equal 100% of the principal
amount of the 2027 Convertible Notes being redeemed, plus accrued and unpaid
interest to, but excluding, the redemption date.
The net carrying value of the Convertible Notes was as follows:
November 30,
(in millions) 2024 2023
Principal $1,131 $1,557
Less: Unamortized debt discount and debt issue costs (19) (27)
$1,112 $1,530
The interest expense recognized related to the Convertible Notes was as
follows:
November 30,
(in millions) 2024 2023 2022
Contractual interest expense $86 $91 $32
Amortization of debt discount and debt issue costs 8 9 29
$94 $100 $61
As of November 30, 2024, the if-converted value above par was $1.0 billion on
84.5 million available shares for the 2027 Convertible Notes.
Collateral and Priority Pool
As of November 30, 2024, the net book value of our ships and ship
improvements, excluding ships under construction, is $39.3 billion. Our
secured debt is secured on a first-priority basis by certain collateral, which
includes vessels and certain assets related to those vessels and material
intellectual property (combined net book value of approximately
$22.4 billion, including $20.8 billion related to vessels and certain assets
related to those vessels) as of November 30, 2024 and certain other assets.
As of November 30, 2024, $8.0 billion in net book value of our ships and ship
improvements relate to the priority pool vessels included in the priority pool
of 12 unencumbered vessels (the "Senior Priority Notes Subject Vessels") for
our 2028 Senior Priority Notes and $2.8 billion in net book value of our ship
and ship improvements relate to the priority pool vessels included in the
priority pool of the three Revolving Facility Subject Vessels for our
Revolving Facility. As of November 30, 2024, there was no change in the
identity of the Senior Priority Notes Subject Vessels or the Revolving
Facility Subject Vessels.
Covenant Compliance
As of November 30, 2024, 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) at a ratio of
not less than 2.0 to 1.0 for each testing date occurring from November 30,
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
• 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 65%
• Maintain minimum liquidity of $1.5 billion
• Adhere to certain restrictive covenants through August 2027
(subject to such covenants terminating if we reach an investment grade credit
rating in accordance with the agreement governing the Revolving Facility)
• Limit the amounts of our secured assets as well as secured and
other indebtedness
At November 30, 2024, 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.
NOTE 6 - Contingencies
Litigation
We are routinely involved in legal proceedings, claims, disputes, regulatory
matters and governmental inspections or investigations arising in the ordinary
course of or incidental to our business. We have insurance coverage for
certain of these claims and actions, or any settlement of these claims and
actions, and historically the maximum amount of our liability, net of any
insurance recoverables, has been limited to our self-insurance retention
levels.
We record provisions in the consolidated financial statements for pending
litigation when we determine that an unfavorable outcome is probable and the
amount of the loss can be reasonably estimated.
Legal proceedings and government investigations are subject to inherent
uncertainties, and unfavorable rulings or other events could occur.
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. An unfavorable
outcome might result in a material adverse impact on our business, results of
operations, financial position or liquidity.
As previously disclosed, on May 2, 2019, the Havana Docks Corporation filed a
lawsuit against Carnival Corporation in the U.S. District Court for the
Southern District of Florida under Title III of the Cuban Liberty and
Democratic Solidarity Act, also known as the Helms-Burton Act, alleging that
Carnival Corporation "trafficked" in confiscated Cuban property when certain
ships docked at certain ports in Cuba, and that this alleged "trafficking"
entitles the plaintiffs to treble damages. On March 21, 2022, the court
granted summary judgment in favor of Havana Docks Corporation as to liability.
On December 30, 2022, the court entered judgment against Carnival Corporation
in the amount of $110 million plus $4 million in fees and costs. We
appealed. On October 22, 2024, the Court of Appeals for the 11(th) Circuit
reversed the District Court's judgment against us. The case will be remanded
to the District Court for further proceedings in accordance with the decision.
We believe the ultimate outcome of this matter will not have a material impact
on our consolidated financial statements.
As of November 30, 2024, two purported class actions brought against us by
former guests in the Federal Court in Australia and in Italy remain pending,
as previously disclosed. These actions include 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 our ships. On October 24, 2023, the court in the
Australian matter held that we were liable for negligence and for breach of
consumer protection warranties as it relates to the lead plaintiff. The court
ruled that the lead plaintiff was not entitled to any pain and suffering or
emotional distress damages on the negligence claim and awarded medical costs.
In relation to the consumer protection warranties claim, the court found that
distress and disappointment damages amounted to no more than the refund
already provided to guests and therefore made no further award. Further
proceedings will determine the applicability of this ruling to the remaining
class participants. We continue to take actions to defend against the above
claims. We believe the ultimate outcome of these matters will not have a
material impact on our consolidated financial statements.
Regulatory or Governmental Inquiries and Investigations
We have been, and may continue to be, impacted by breaches in data security
and lapses in data privacy, which occur from time to time. These can vary in
scope and range from inadvertent events to malicious motivated attacks.
We have incurred legal and other costs in connection with cyber incidents that
have impacted us. The penalties and settlements paid in connection with cyber
incidents over the last three years were not material. While these incidents
did not 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 attacks, incidents or litigation that could
have such a material adverse effect.
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.
Under the European Union Treaty, certain economic benefits that are provided
under Italian law are subject to approval on a periodic basis by the European
Commission, with the most recent approval granted through December 31, 2023.
One of our subsidiaries continues to receive and recognize these benefits. The
Italian Government has requested approval for these benefits to continue to be
applied after December 31, 2023. The timing of the European Commission's
decision is uncertain and could take more than a year. If the European
Commission were to deny a portion or all of the benefits, the Italian
Government may be required to retroactively disallow these benefits and seek
reimbursement from us which would result in a reversal of the recognition of
such benefits, which depending on the timing of resolution, could have a
material impact on our consolidated financial statements.
Other Contingent Obligations
Some of the debt contracts we enter into include indemnification provisions
obligating us to make payments to the counterparty if certain events occur.
These contingencies generally relate to changes in taxes or changes in laws
which increase the lender's costs. There are no stated or notional amounts
included in the indemnification clauses, and we are not able to estimate the
maximum potential amount of future payments, if any, under these
indemnification clauses.
We have agreements with a number of credit card processors that transact
customer deposits related to our cruise vacations. Certain of these agreements
allow the credit card processors to request, under certain circumstances, that
we provide a capped reserve fund in cash. 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 November 30, 2024 we were not required to maintain any reserve funds or
compensating deposits. As of November 30, 2023, we had $844 million in
reserve funds and $158 million in compensating deposits we were required to
maintain, which were included within other assets.
NOTE 7 - Ship Commitments
As of November 30, 2024, our new ship growth capital commitments were
$0.9 billion, $0.4 billion, $1.3 billion, $1.3 billion, $1.5 billion and
$3.2 billion for the years ending November 30, 2025, 2026, 2027, 2028, 2029
and thereafter.
NOTE 8 - Taxation
A summary of our principal taxes and exemptions in the jurisdictions where our
significant operations are located is as follows:
U.S. Income Tax
We are primarily foreign corporations engaged in the business of operating
cruise ships in international transportation. We also own and operate, among
other businesses, the U.S. hotel and transportation business of Holland
America Princess Alaska Tours through U.S. corporations.
Our North American cruise ship businesses and certain ship-owning subsidiaries
are engaged in a trade or business within the U.S. Depending on its
itinerary, any particular ship may generate income from sources within the
U.S. We believe that our U.S. source income and the income of our ship-owning
subsidiaries, to the extent derived from, or incidental to, the international
operation of a ship or ships, is exempt from U.S. federal income and branch
profit taxes.
Our domestic U.S. operations, principally the hotel and transportation
business of Holland America Princess Alaska Tours, are subject to federal and
state income taxation in the U.S.
In general, under Section 883 of the Internal Revenue Code, certain non-U.S.
corporations (such as our North American cruise ship businesses) are not
subject to U.S. federal income tax or branch profits tax on U.S. source income
derived from, or incidental to, the international operation of a ship or
ships. Applicable U.S. Treasury regulations provide in general that a foreign
corporation will qualify for the benefits of Section 883 if, in relevant part,
(i) the foreign country in which the foreign corporation is organized grants
an equivalent exemption to corporations organized in the U.S. in respect of
each category of shipping income for which an exemption is being claimed under
Section 883 (an "equivalent exemption jurisdiction") and (ii) the foreign
corporation meets a defined publicly-traded corporation stock ownership test
(the "publicly-traded test"). Subsidiaries of foreign corporations that are
organized in an equivalent exemption jurisdiction and meet the publicly-traded
test also benefit from Section 883. We believe that Panama is an equivalent
exemption jurisdiction and that Carnival Corporation currently satisfies the
publicly-traded test under the regulations. Accordingly, substantially all of
Carnival Corporation's income is exempt from U.S. federal income and branch
profit taxes.
Regulations under Section 883 list certain activities that the Internal
Revenue Service ("IRS") does not consider to be incidental to the
international operation of ships and, therefore, the income attributable to
such activities, to the extent such income is U.S. source, does not qualify
for the Section 883 exemption. Among the activities identified as not
incidental are income from the sale of air transportation, transfers, shore
excursions and pre- and post-cruise land packages to the extent earned from
sources within the U.S.
We believe that the U.S. source transportation income earned by Carnival plc
and its subsidiaries qualifies for exemption from U.S. federal income tax
under applicable bilateral U.S. income tax treaties.
Carnival Corporation, Carnival plc and certain subsidiaries are subject to
various U.S. state income taxes generally imposed on each state's portion of
the U.S. source income subject to U.S. federal income taxes. However, the
state of Alaska imposes an income tax on its allocated portion of the total
income of our companies doing business in Alaska and certain of their
subsidiaries.
UK and Australian Income Tax
Cunard, P&O Cruises (UK) and P&O Cruises (Australia) are divisions of
Carnival plc and have elected to enter the UK tonnage tax regime under a
rolling ten-year term and, accordingly, reapply every year. Companies to which
the tonnage tax regime applies pay corporation taxes on profits calculated by
reference to the net tonnage of qualifying ships. UK corporation tax is not
chargeable under the normal UK tax rules on these brands' relevant shipping
income. Relevant shipping income includes income from the operation of
qualifying ships and from shipping related activities.
For a company to be eligible for the regime, it must be subject to UK
corporation tax and, among other matters, operate qualifying ships that are
strategically and commercially managed in the UK. Companies within the UK
tonnage tax regime are also subject to a seafarer training requirement.
Our UK non-shipping activities that do not qualify under the UK tonnage tax
regime remain subject to normal UK corporation tax.
P&O Cruises (Australia) and all of the other cruise ships operated
internationally by Carnival plc for the cruise segment of the Australian
vacation region are exempt from Australian corporation tax by virtue of the
UK/Australian income tax treaty.
Italian and German Income Tax
In December 2024, the European Commission formally approved the Italian
tonnage tax rules for 10 years. In 2025, Costa and AIDA will elect to remain
in the Italian tonnage tax regime through 2034. Companies to which the tonnage
tax regime applies pay corporation taxes on shipping profits calculated by
reference to the net tonnage of qualifying ships.
Our non-shipping activities that do not qualify under the Italian tonnage tax
regime remain subject to normal Italian corporation tax.
Substantially all of AIDA's earnings are exempt from German income taxes by
virtue of the Germany/Italy income tax treaty.
Global Minimum Tax
The Organization for Economic Co-operation and Development ("OECD") issued
Model Rules for implementation of a 15% minimum tax for multinational
enterprises as part of its initiative intended to address the tax challenges
arising from globalization. Subject to certain requirements, the OECD Model
Rules provide an exclusion for international shipping income.
The implementation of these rules will affect Carnival plc and its
subsidiaries beginning in fiscal 2025 and Carnival Corporation and certain of
its subsidiaries beginning in fiscal 2026. We expect Carnival plc and its
subsidiaries will be eligible for the international shipping income exclusion
based on their current structure. Carnival Corporation and certain of its
subsidiaries intend to align into a single tax jurisdiction where the
international shipping income for its North American brands is also expected
to qualify for this exemption. As a result, we do not believe the
application of these rules will have a material impact on our consolidated
financial statements.
Other
In addition to or in place of income taxes, virtually all jurisdictions where
our ships call impose taxes, fees and other charges based on guest counts,
ship tonnage, passenger capacity or some other measure.
NOTE 9 - Shareholders' Equity
Carnival Corporation's Articles of Incorporation authorize its Boards of
Directors, at its discretion, to issue up to 40.0 million shares of preferred
stock. At November 30, 2024 and 2023, no Carnival Corporation preferred stock
or Carnival plc preference shares had been issued.
Public Equity Offerings
In August 2022, we completed a public 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.
Accumulated Other Comprehensive Income (Loss)
November 30,
(in millions) 2024 2023 2022
Cumulative foreign currency translation adjustments, net $(1,955) $(1,952) $(2,004)
Unrecognized pension expenses (45) (34) (31)
Net gains on cash flow derivative hedges and other 26 48 53
$(1,975) $(1,939) $(1,982)
During 2024, 2023 and 2022, we had an immaterial amount of unrecognized
pension expenses that were reclassified out of accumulated other comprehensive
loss and were included within payroll and related expenses and selling and
administrative expenses.
NOTE 10 - Fair Value Measurements, Derivative Instruments and Hedging
Activities and Financial Risks
Fair Value Measurements
Fair value is defined as the amount that would be received for selling an
asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date and is measured using inputs in one of
the following three categories:
• Level 1 measurements are based on unadjusted quoted prices in
active markets for identical assets or liabilities that we have the ability to
access. Valuation of these items does not entail a significant amount of
judgment
• Level 2 measurements are based on quoted prices for similar
assets or liabilities in active markets, quoted prices for identical or
similar assets or liabilities in markets that are not active or market data
other than quoted prices that are observable for the assets or liabilities
• Level 3 measurements are based on unobservable data that are
supported by little or no market activity and are significant to the fair
value of the assets or liabilities
Considerable judgment may be required in interpreting market data used to
develop the estimates of fair value. Accordingly, certain estimates of fair
value presented herein are not necessarily indicative of the amounts that
could be realized in a current or future market exchange.
Financial Instruments that are not Measured at Fair Value on a Recurring Basis
November 30, 2024 November 30, 2023
Carrying Fair Value Carrying Fair Value
Value Value
(in millions) Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
Liabilities
Fixed rate debt (a) $22,449 $- $23,241 $- $22,575 $- $21,503 $-
Floating rate debt (a) 5,764 - 5,685 - 8,764 - 8,225 -
Total $28,213 $- $28,927 $- $31,339 $- $29,728 $-
(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. The fair values of our other debt were estimated based on
current market interest rates being applied to this debt.
Financial Instruments that are Measured at Fair Value on a Recurring Basis
November 30, 2024 November 30, 2023
(in millions) Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
Assets
Cash equivalents (a) $404 $- $- $1,021 $- $-
Derivative financial instruments - 2 - - 22 -
Total $404 $2 $- $1,021 $22 $-
Liabilities
Derivative financial instruments $- $4 $- $- $28 $-
Total $- $4 $- $- $28 $-
(a) Consists of money market funds and cash investments with original
maturities of less than 90 days.
Nonfinancial Instruments that are Measured at Fair Value on a Nonrecurring
Basis
Valuation of Goodwill and Trademarks
As of July 31, 2024, we performed our annual goodwill and trademark impairment
reviews and determined there was no impairment for goodwill or trademarks.
As of November 30, 2024 and November 30, 2023, goodwill for our NAA segment
was $579 million.
Trademarks
(in millions) NAA Europe Segment Total
Segment
At November 30, 2022 $927 $224 $1,151
Exchange movements - 14 14
At November 30, 2023 927 237 1,164
Exchange movements - (4) (4)
At November 30, 2024 $927 $234 $1,161
Impairment of Ships
In 2022, we determined that two ships had net carrying values that exceeded
their respective estimated undiscounted future cash flows. We then estimated
the fair value of these ships, based on their estimated selling values, and
recognized ship impairment charges of $428 million which are included in ship
and other impairments in our Consolidated Statements of Income (Loss). On a
segment level, we recognized $8 million for our NAA segment and $421 million
for our Europe segment. The principal assumption used in determining the fair
value of these ships were the estimated sales proceeds, which are considered a
Level 3 input.
We believe we have made reasonable estimates and judgments as part of our
assessments. A change in the principal judgments or estimates may result in a
need to perform additional impairment reviews.
Refer to Note 2 - "Summary of Significant Accounting Policies, Preparation of
Consolidated Financial Statements" for additional discussion.
Derivative Instruments and Hedging Activities
November 30,
(in millions) Balance Sheet Location 2024 2023
Derivative assets
Derivatives designated as hedging instruments
Interest rate swaps (a) Prepaid expenses and other $2 $-
Other assets - 22
Derivatives not designated as hedging instruments
Interest rate swaps (a) Prepaid expenses and other - 1
Total derivative assets $2 $22
Derivative liabilities
Derivatives designated as hedging instruments
Cross currency swaps (b) Other long-term liabilities $- $12
Interest rate swaps (a) Other long-term liabilities 4 16
Total derivative liabilities $4 $28
(a) We have interest rate swaps whereby we receive floating interest rate
payments in exchange for making fixed interest rate payments. These interest
rate swap agreements effectively changed $11 million at November 30, 2024 and
$46 million at November 30, 2023 of EURIBOR-based floating rate euro debt to
fixed rate euro debt, and $1.0 billion at November 30, 2024 and $2.5 billion
at November 30, 2023 of SOFR-based variable rate debt to fixed rate debt. In
2024, we terminated a portion of our SOFR-based interest rate swaps with a
notional amount of $1.5 billion. As of November 30, 2024 and November 30,
2023, the EURIBOR-based interest rate swaps settle through 2025 and were not
designated as cash flow hedges; the SOFR-based interest rate swaps settle
through 2027 and were designated as cash flow hedges.
(b) At November 30, 2023, we had a cross currency swap with a notional
amount of $670 million that was designated as a hedge of our net investment
in foreign operations with euro-denominated functional currencies. This cross
currency swap was terminated in 2024.
Our derivative contracts include rights of offset with our counterparties. As
of November 30, 2024 and 2023, there was no netting for our derivative assets
and liabilities. The amounts that were not offset in the balance sheet were
not material.
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:
November 30,
(in millions) 2024 2023 2022
Gains (losses) recognized in AOCI:
Cross currency swaps - net investment hedges - included component $- $(4) $72
Cross currency swaps - net investment hedges - excluded component $- $(4) $(26)
Interest rate swaps - cash flow hedges $3 $32 $11
(Gains) losses reclassified from AOCI - cash flow hedges:
Interest rate swaps - Interest expense, net of capitalized interest $(25) $(34) $2
Foreign currency zero cost collars - Depreciation and amortization $(1) $(2) $(2)
Gains (losses) recognized on derivative instruments (amount excluded from
effectiveness testing - net investment hedges)
Cross currency swaps - Interest expense, net of capitalized interest $2 $11 $5
The amount of gains and losses on derivatives not designated as hedging
instruments recognized in earnings during the year ended November 30, 2024 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
Fuel Price Risks
We manage our exposure to fuel price risk by managing our consumption of fuel.
Substantially all of our exposure to market risk for changes in fuel prices
relates to the consumption of fuel on our ships. We manage fuel consumption
through fleet optimization, energy efficiency, itinerary efficiency, and new
technologies and alternative fuels.
Foreign Currency Exchange Rate Risks
Overall Strategy
We manage our exposure to fluctuations in foreign currency exchange rates
through our normal operating and financing activities, including netting
certain exposures to take advantage of any natural offsets and, when
considered appropriate, through the use of derivative and non-derivative
financial instruments. Our primary focus is to monitor our exposure to, and
manage, the economic foreign currency exchange risks faced by our operations
and realized if we exchange one currency for another. We consider hedging
certain of our ship commitments and net investments in foreign operations. The
financial impacts of our hedging instruments generally offset the changes in
the underlying exposures being hedged.
Operational Currency Risks
Our operations primarily utilize the U.S. dollar, Euro, Sterling or the
Australian dollar as their functional currencies. Our operations also have
revenue and expenses denominated in non-functional currencies. Movements in
foreign currency exchange rates affect our consolidated financial statements.
Investment Currency Risks
We consider our investments in foreign operations to be denominated in stable
currencies and of a long-term nature. We have euro-denominated debt which
provides an economic offset for our operations with euro functional currency.
In addition, we have in the past and may in the future utilize derivative
financial instruments, such as cross currency swaps, to manage our exposure to
investment currency risks.
Newbuild Currency Risks
Our shipbuilding contracts are typically denominated in euros. At November 30,
2024, our newbuild currency exchange rate risk relates to euro-denominated
newbuild contract payments for non-euro functional currency brands. 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. We have in the past and may in the future utilize derivative
financial instruments, such as foreign currency derivatives, to manage our
exposure to newbuild currency risks. Our decisions to hedge non-functional
currency ship commitments for our cruise brands are 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.
Interest Rate Risks
We manage our exposure to fluctuations in interest rates through our debt
portfolio management and investment strategies. We evaluate our debt
portfolio to determine whether to make periodic adjustments to the mix of
fixed and floating rate debt through the use of interest rate swaps and the
issuance of new debt.
Concentrations of Credit Risk
As part of our ongoing control procedures, we monitor concentrations of credit
risk associated with financial and other institutions with which we conduct
significant business. We seek to manage these credit risk exposures,
including counterparty nonperformance primarily associated with our cash and
cash equivalents, investments, notes receivables, reserve funds related to
customer deposits (when required), future financing facilities, contingent
obligations, derivative instruments, insurance contracts and new ship progress
payment guarantees, by:
• Conducting business with well-established financial
institutions, insurance companies and export credit agencies
• Diversifying our counterparties
• Having guidelines regarding credit ratings and investment
maturities that we follow to help safeguard liquidity and minimize risk
• Generally requiring collateral and/or guarantees to support
notes receivable on significant asset sales and new ship progress payments to
shipyards
We also monitor the creditworthiness of travel agencies and tour operators in
Australia and Europe and credit and debit card providers to which we extend
credit in the normal course of our business. Our credit exposure also
includes contingent obligations related to cash payments received directly by
travel agents and tour operators for cash collected by them on cruise sales in
Australia and most of Europe where we are obligated to honor our guests'
cruise payments made by them to their travel agents and tour operators
regardless of whether we have received these payments.
Concentrations of credit risk associated with trade receivables and other
receivables, charter-hire agreements and contingent obligations are not
considered to be material, principally due to the large number of unrelated
accounts, the nature of these contingent obligations and their short
maturities. Normally, we have not required collateral or other security to
support normal credit sales and have not experienced significant credit
losses.
NOTE 11 - Leases
The components of expense were as follows:
November 30,
(in millions) 2024 2023 2022
Operating lease expense $215 $213 $192
Variable lease expense (a) (b) $211 $116 $(39)
(a) Variable lease expense represents costs associated with our multi-year
preferential berthing agreements which vary based on the number of passengers.
These costs are recorded within commissions, transportation and other in our
Consolidated Statements of Income (Loss). Variable lease expense related to
operating leases, other than the port facilities, were not material to our
consolidated financial statements.
(b) Several of our preferential berthing agreements have force majeure
provisions which were in effect during the pause in guest cruise operations
due to COVID-19.
During 2024, 2023 and 2022, the cash outflow for leases was materially
consistent with the lease expense recognized and short-term lease costs were
not material.
Right-of-use assets obtained in exchange for new and amended operating lease
liabilities was $247 million in 2024 and $108 million in 2023.
Weighted average of the remaining lease terms and weighted average discount
rates are as follows:
November 30, 2024 November 30, 2023
Weighted average remaining lease term - operating leases (in years) 12 12
Weighted average discount rate - operating leases 5.9% 5.9%
As of November 30, 2024, maturities of operating lease liabilities were as
follows:
(in millions)
Year
2025 $228
2026 227
2027 213
2028 200
2029 147
Thereafter 931
Total lease payments 1,947
Less: Present value discount (545)
Present value of lease liabilities $1,402
For time charter arrangements where we are the lessor and for transactions
with cruise guests related to the use of cabins, we do not separate lease and
non-lease components since (1) the lease on a standalone basis would be
classified as an operating lease and (2) the timing and pattern of transfer
for the lease component and associated non-lease component are the same. As
the non-lease components are the predominant components in the agreements, we
account for these transactions under the Revenue Recognition guidance.
NOTE 12 - Segment Information
The chief operating decision maker, who is the President, Chief Executive
Officer and Chief Climate Officer of Carnival Corporation and Carnival plc
assesses performance and makes decisions to allocate resources for Carnival
Corporation & plc based upon review of the results across all of our
segments. The operating segments within each of our reportable segments have
been aggregated based on the similarity of their economic and other
characteristics, including geographic guest sourcing. Our four reportable
segments are comprised of (1) NAA cruise operations, (2) Europe cruise
operations ("Europe"), (3) Cruise Support and (4) Tour and Other.
Our Cruise Support segment includes our portfolio of leading port destinations
and exclusive islands as well as other services, all of which are operated for
the benefit of our cruise brands. Our Tour and Other segment represents the
hotel and transportation operations of Holland America Princess Alaska Tours
and other operations.
As of and for the years ended November 30,
(in millions) Revenues Operating expenses Selling and administrative Depreciation and amortization Operating income (loss) Capital expenditures Total assets
2024
NAA $16,802 $10,555 $1,952 $1,664 $2,631 $3,943 $30,892
Europe 7,710 4,734 961 676 1,340 270 15,042
Cruise Support 255 156 320 193 (414) 382 2,732
Tour and Other 255 193 19 24 18 32 390
$25,021 $15,638 $3,252 $2,557 $3,574 $4,626 $49,057
2023
NAA $14,588 $9,587 $1,753 $1,495 $1,752 $1,932 $28,547
Europe 6,535 4,398 876 668 593 1,161 16,524
Cruise Support 206 127 294 184 (399) 179 3,667
Tour and Other 265 205 27 23 11 12 382
$21,593 $14,317 $2,950 $2,370 $1,956 $3,284 $49,120
2022
NAA $8,281 $7,526 $1,517 $1,408 $(2,170) $2,568 $27,413
Europe 3,531 3,925 745 692 (1,830) 2,213 15,317
Cruise Support 171 120 225 140 (315) 155 8,461
Tour and Other 185 187 27 36 (64) 4 512
$12,168 $11,757 $2,515 $2,275 $(4,379) $4,940 $51,703
Revenue by geographic areas, which are based on where our guests are sourced,
were as follows:
Years Ended November 30,
(in millions) 2024 2023 2022
North America $15,089 $13,112 $7,866
Europe 7,573 6,565 3,918
Australia 1,445 1,181 252
Other 915 735 132
$25,021 $21,593 $12,168
Substantially all of our long-lived assets consist of our ships and move
between geographic areas.
NOTE 13 - Compensation Plans and Post-Employment Benefits
Equity Plans
We issue our share-based compensation awards, which at November 30, 2024
included time-based share awards (restricted stock awards and restricted stock
units) and performance-based share awards (restricted stock units)
(collectively "equity awards"), under the Carnival Corporation and Carnival
plc stock plans. Equity awards are principally granted to management level
employees and members of our Boards of Directors. The plans are administered
by the Compensation Committees which are made up of independent directors who
determine which employees are eligible to participate, the monetary value or
number of shares for which equity awards are to be granted and the amounts
that may be exercised or sold within a specified term. We had an aggregate of
26.8 million shares available for future grant at November 30, 2024. We
fulfill our equity award obligations using shares purchased in the open market
or with unissued or treasury shares. Our equity awards generally vest over a
three-year period, subject to earlier vesting under certain conditions.
Shares Weighted-Average
Grant Date Fair
Value
Outstanding at November 30, 2023 10,289,628 $11.45
Granted 5,746,531 $15.29
Vested (3,802,982) $13.91
Forfeited (310,931) $12.71
Outstanding at November 30, 2024 11,922,246 $12.48
As of November 30, 2024, there was $109 million of total unrecognized
compensation cost related to equity awards, which is expected to be recognized
over a weighted-average period of 1.6 years.
Single-employer Defined Benefit Pension Plans
We maintain several single-employer defined benefit pension plans, which cover
certain shipboard and shoreside employees. The U.S. and UK shoreside employee
plans are closed to new membership and are funded at or above the level
required by U.S. or UK regulations. The remaining defined benefit plans are
primarily unfunded. These plans provide pension benefits primarily based on
employee compensation and years of service.
UK Plan (a) All Other Plans
(in millions) 2024 2023 2024 2023
Change in projected benefit obligation:
Projected benefit obligation as of December 1 $181 $198 $226 $223
Past service cost 1 1 18 18
Interest cost 8 8 12 11
Benefits paid (7) (6) (17) (20)
Actuarial (gain) loss on plans' liabilities (3) (19) 12 (4)
Plan curtailments, settlements and other - - (1) (1)
Administrative expenses (1) (1) - -
Exchange movements and other (21) - - -
Projected benefit obligation as of November 30 159 181 250 226
Change in plan assets:
Fair value of plan assets as of December 1 196 222 9 10
Return (loss) on plans' assets 4 (20) 1 -
Employer contributions - 1 17 20
Benefits paid (7) (6) (17) (20)
Plan settlements - - (1) (1)
Administrative expenses (1) (1) - -
Exchange movements and other (25) - - -
Fair value of plan assets as of November 30 168 196 8 9
Funded status as of November 30 $9 $15 $(242) $(218)
(a) The P&O Princess Cruises (UK) Pension Scheme ("UK Plan")
The amounts recognized in the Consolidated Balance Sheets for these plans were
as follows:
UK Plan All Other Plans
November 30, November 30,
(in millions) 2024 2023 2024 2023
Other assets $9 $15 $- $-
Accrued liabilities and other $- $- $32 $29
Other long-term liabilities $- $- $210 $188
The accumulated benefit obligation for all defined benefit pension plans was
$244 million and $220 million at November 30, 2024 and 2023.
Amounts for pension plans with accumulated benefit obligations in excess of
fair value of plan assets are as follows:
November 30,
(in millions) 2024 2023
Projected benefit obligation $250 $226
Accumulated benefit obligation $244 $220
Fair value of plan assets $8 $9
The net periodic pension cost recognized in the Consolidated Statements of
Income (Loss) were as follows:
UK Plan All Other Plans
November 30, November 30,
(in millions) 2024 2023 2022 2024 2023 2022
Service cost $1 $1 $- $18 $18 $18
Interest cost 8 8 5 12 11 5
Expected return on plan assets (9) (8) (6) - - -
Amortization of net loss (gain) 2 - - - - 3
Settlement loss recognized - - - - 1 1
Net periodic pension cost (income) $2 $1 $(1) $31 $30 $26
The components of net periodic pension cost other than the service cost
component are included in other income (expense), net in the Consolidated
Statements of Income (Loss).
Weighted average assumptions used to determine the projected benefit
obligation are as follows:
UK Plan All Other Plans
2024 2023 2024 2023
Discount rate 5.2% 5.2% 5.2% 5.7%
Rate of compensation increase 2.9% 2.9% 3.0% 3.0%
Weighted average assumptions used to determine net pension income are as
follows:
UK Plan All Other Plans
2024 2023 2022 2024 2023 2022
Discount rate 5.2% 4.3% 1.6% 5.6% 5.4% 3.2%
Expected return on assets 5.6% 4.3% -% 6.0% 3.5% 2.3%
Rate of compensation increase 2.9% 2.9% 2.7% 3.0% 3.0% 3.0%
The discount rate used to determine the UK Plan's projected benefit obligation
was determined as the single equivalent rate based on applying a yield curve
determined from AA credit rated bonds at the balance sheet date to the cash
flows making up the pension plan's obligations. The discount rate used to
determine the UK Plan's future net periodic pension cost was determined as the
equivalent rate based on applying each individual spot rate from a yield curve
determined from AA credit rated bonds at the balance sheet date for each
year's cash flow. The UK Plan's expected long-term return on plan assets is
consistent with the long-term investment return target provided to the UK
Plan's fiduciary manager (UK government fixed interest bonds (gilts)) plus
1.0% and was 5.7% per annum as of November 30, 2024.
Amounts recognized in AOCI are as follows:
UK Plan All Other Plans
November 30, November 30,
2024 2023 2024 2023
Actuarial losses (gains) recognized in the current year $2 $9 $12 $(4)
Amortization and settlements included in net periodic pension cost $(2) $(1) $(1) $(1)
We anticipate making contributions of $33 million to the plans during 2025.
Estimated future benefit payments to be made during each of the next five
fiscal years and in the aggregate during the succeeding five fiscal years are
as follows:
(in millions) UK Plan All Other Plans
2025 $7 $33
2026 7 30
2027 7 29
2028 8 31
2029 8 30
2030-2034 50 146
$88 $298
Our investment strategy for our pension plan assets is to maintain a
diversified portfolio of asset classes to produce a sufficient level of
diversification and investment return over the long term. The investment
policy for each plan specifies the type of investment vehicles appropriate for
the plan, asset allocation guidelines, criteria for selection of investment
managers and procedures to monitor overall investment performance, as well as
investment manager performance. As of November 30, 2024 and 2023, the All
Other Plans were unfunded.
The fair values of the plan assets of the UK Plan by investment class are as
follows:
November 30,
2024 2023
Equities $11 $47
UK government fixed interest bonds (gilts) 157 149
$168 $196
Multiemployer Defined Benefit Pension Plans
We participate in two multiemployer defined benefit pension plans in the UK,
the British Merchant Navy Officers Pension Fund (registration number 10005645)
("MNOPF"), which is divided into two sections, the "Old Section" and the "New
Section," and the British Merchant Navy Ratings Pension Fund (registration
number 10005646) ("MNRPF"). Collectively, we refer to these as "the
multiemployer plans." The multiemployer plans are maintained for the benefit
of the employees of the participating employers who make contributions to the
plans. The risks of participating in these multiemployer plans are different
from single-employer plans, including:
• Contributions made by employers, including us, may be used to
provide benefits to employees of other participating employers
• If any of the participating employers were to withdraw from the
multiemployer plans or fail to make their required contributions, any unfunded
obligations would be the responsibility of the remaining participating
employers.
We are contractually obligated to make all required contributions as
determined by the plans' trustees. All of our multiemployer plans are closed
to new membership and future benefit accrual.
The MNOPF Old Section is fully funded and covered by a third-party insurer,
with no further funding obligations.
We expense our portion of the MNOPF New Section deficit as amounts are
invoiced by, and become due and payable to, the trustees. Based on the most
recent triennial valuation at March 31, 2024 of the MNOPF New Section, it was
determined that this plan was 100% funded. In 2024, 2023 and 2022, our
contributions to the MNOPF New Section did not exceed 5% of total
contributions to the fund.
We accrue and expense our portion of the MNRPF deficit based on our estimated
probable obligation from the most recent actuarial review. Based on the most
recent triennial valuation at March 31, 2023 of the MNRPF, it was determined
that this plan was 85% funded. Our share of the deficit of $3 million was
paid in 2024. In 2024, 2023 and 2022, our contributions to the MNRPF did not
exceed 5% of total contributions to the fund.
Total expense (benefit) for the multiemployer plans was $(19) million in 2024,
$1 million in 2023 and $2 million in 2022.
Defined Contribution Plans
We have several defined contribution plans available to most of our employees.
We contribute to these plans based on employee contributions, salary levels
and length of service. Total expense for these plans was $47 million in 2024,
$48 million in 2023 and $40 million in 2022.
NOTE 14 - Earnings Per Share
Years Ended November 30,
(in millions, except per share data) 2024 2023 2022
Net income (loss) $1,916 $(74) $(6,093)
Interest expense on dilutive Convertible Notes 94 - -
Net income (loss) for diluted earnings per share $2,009 $(74) $(6,093)
Weighted-average shares outstanding 1,274 1,262 1,180
Dilutive effect of equity awards 5 - -
Dilutive effect of Convertible Notes 119 - -
Diluted weighted-average shares outstanding 1,398 1,262 1,180
Basic earnings per share $1.50 $(0.06) $(5.16)
Diluted earnings per share $1.44 $(0.06) $(5.16)
Antidilutive shares excluded from diluted earnings per share computations were
as follows:
November 30,
(in millions) 2024 2023 2022
Equity awards - 4 1
Convertible Notes - 130 55
Total antidilutive securities - 134 56
NOTE 15 - Supplemental Cash Flow Information
November 30,
(in millions) 2024 2023 2022
Cash and cash equivalents (Consolidated Balance Sheets) $1,210 $2,415 $4,029
Restricted cash (a) 21 21 2,008
Total cash, cash equivalents and restricted cash (Consolidated Statements of $1,231 $2,436 $6,037
Cash Flows)
(a) Substantially all restricted cash as of November 30, 2022 related to
the net proceeds from the issuance of our 2028 Senior Priority Notes. The
contractual restrictions on these proceeds were satisfied in December 2022 at
which time these amounts became unrestricted.
Cash paid for interest, net of capitalized interest, was $1.6 billion in
2024, $2.0 billion in 2023 and $1.4 billion in 2022. Cash benefit received
(paid) for income taxes, net was not material in 2024, 2023 and 2022. Non-cash
purchases of property and equipment included in accrued liabilities and other
were $392 million in 2024, $307 million in 2023 and $100 million in 2022.
In August 2022, we issued $339 million aggregate principal amount of 2024
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. In November 2022, we issued an
additional $87 million aggregate principal amount of the 2024 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
additional 2024 Convertible Notes. In September 2024, substantially all of the
2024 Convertible Notes were converted to shares of common stock.
Refer to Note 5 - "Debt" for additional detail relating to our 2028 Senior
Priority Notes and the 2024 Convertible Notes.
For the years ended November 30, 2024, 2023 and 2022, we did not have
borrowings or repayments of commercial paper with original maturities greater
than three months.
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