3. Internal Control and Risk Assessment.
Item 1A. Risk Factors.Factors.
You should carefully consider the specificfollowing discussion of significant factors, events and uncertainties that make an investment in the Company’s securities risky and provide important information for the understanding of the “forward-looking” statements discussed in this Form 10-K and elsewhere. These risk factors set forth below and theshould be read in conjunction with other information contained or incorporated by reference in this document, asForm 10-K.
The events and consequences discussed in these are important factors that could cause our actual results, performance or achievements to differ materially from our expected or historical results. The ordering and lettering of the risk factors set forth below iscould have a material adverse effect on the Company’s business, financial condition, operating results and stock price. These risk factors do not intendedidentify all risks that the Company faces; operations could also be affected by factors, events, or uncertainties that are not presently known to reflect anythe Company indicationor that the Company currently does not consider to present significant risks to its operations. In addition, the current global economic climate amplifies many of priority or likelihood.these risks. Some of the statements in this item and elsewhere in this document are “forward-looking statements.” For a discussion of those statements and of other factors to consider see the “Cautionary Note Concerning Factors That May Affect Future Results” section below.
The ordering and lettering of the risk factors set forth below is not intended to reflect any Company indication of priority or likelihood.
a. The demand for cruises may decline due to adverse worldWorld events impacting the ability or desire of people to travel including conditions affectingmay lead to a decline in demand for cruises
We may be impacted by the public’s concerns regarding the health, safety and security of travel, including government regulations and requirements, and declines in consumer confidence
Demand for cruises and other vacation options has been and is expected to continue to be affected by the public’s concerns over the safety and security of travel. Government travel advisories and emerging travel restrictions, political instability and civil unrest, and other general concerns over the safety and security of traveling have had a significant adverse impact on demand and pricing in the travel and vacation industry in the past andconcerns. Additionally, we may have an adverse impact in the future.
Governmental actions which increase global travel regulations and restrictions may adversely impact demand for cruises. Heightenedbe impacted by heightened regulations around customs and border control, travel bans to and from certain geographical areas, government policies increasing the difficulty of travel and limitations on issuing international travel visas could reduce the ability or desire of people to travel.
Demand for cruises is in part dependent on consumer confidence in the economic condition of the countries from which cruise companies source their guests. Adversevisas. We may also be impacted by adverse changes in the perceived or actual economic climate, such as global or regional recessions, higher unemployment and underemployment rates and declines in income levels could reduce our potential vacationers’ customer confidence of their discretionary incomes. Consequently, thislevels. Furthermore, uncertainties resulting from the UK’s expected exit from the European Union may negatively affect demand for vacations, including cruise vacations, which are a discretionary purchase.
Decreases in demand could lead to price reductions which, in turn, could reduce the profitability ofimpact our business.
b. Incidents suchconcerning our ships, guests or the cruise vacation industry as ship incidents, security incidents, the spread of contagious diseases and threats thereof,well as adverse weather conditions orand other natural disasters andmay impact the related adverse publicity affecting our reputation and the health, safety, security and satisfaction of our guests and crew and lead to reputational damage
The operation of cruise ships, hotels, land tours, port and related commercial facilities and shore excursionsOur operations involve the risk of incidents including those caused byand media coverage thereof. Such incidents include, but are not limited to, the improper operation or maintenance of ships, motorcoaches and trains; guest and crew illnesses, such as from the spread of contagious diseases;illnesses; mechanical failures, fires and collisions; repair delays; groundings;delays, groundings and navigational errors; oil spills and other maritime and environmental issues; missing passengers andissues as well as other incidents at sea or while in port or on land which may cause injury and death, guest and crew discomfort, alteration of itinerariesinjury, or cancellation of a cruise or series of cruises or tours.death. Although our uncompromising commitment to the safety and comfort of our guests and crew is paramount to the success of our business, our ships have been involved in accidents and other incidents in the past. Wepast and we may experience similar or other incidents in the future. These types of incidents may bring into question guest and crew health, safety, security and satisfaction and may adversely affect our brands’ reputations and the demand for our brands and cruising in general, which may affect our net revenue yields and profitability, result in additional costs to our business, and result in litigation against us and increasing government or other regulatory oversight.
Our ability to effectivelyattract and efficiently operate shipboard and shoreside activities may be impacted by widespread public health issues/illnesses or health warnings resulting in, among other things, reduced demand for cruises and cruise and ship charter cancellations and employee absenteeism that could have an adverse effect on our net revenue yields and profitability. For example, a severe outbreak of the influenza virus or some other pandemic could, among other things, disrupt our ability to embark/disembark passengersretain guests and crew, require changes to cruise itinerary, disrupt airdepends in part, upon the perception and ground travel to and from ports, increase costs for prevention and treatment and adversely affect our supply chain and distribution systems. This could also adversely impact cruise demand in areas unaffected by such an outbreak.
Our ships are subject to the risks of mechanical failures and accidents, for which we have had to incur repair and equipment replacement expenditures. If these occur in the future, we may be unable to procure spare parts or new equipment when needed or make repairs without incurring significant expenditures or suspension of service. A significant performance problem on anyreputation of our ships could have an adverse effect on our financial condition and profitability.company.
Our cruise ships, hotels, land tours, port and related commercial facilities and shore excursions may be impacted by adverse weather patterns or other natural disasters, such as hurricanes, earthquakes, floods, fires, tornados,tornadoes, tsunamis, typhoons and volcanic eruptions. These events could result in, among other things, increased port related and other costs in our supply chain. It is possible that we could be forced to alter itineraries or cancel a cruise or a series of cruises or tours due to these or other factors, which would have antypes of disruptions. Changes in climate may increase the frequency and intensity of adverse effect onweather patterns, make certain destinations less desirable or impact our net revenue yields and profitability.
Extreme weather events such as hurricanes, floods and typhoons may not only cause disruption, alteration, or cancellation of cruises but may also adversely impact commercial airline flights,business in other transport and shore excursion activities or prevent our guests from electing to cruise altogether. Such extreme weather events may also disrupt the supply of provisions, fuel and shore power, and may limit our ability to safely embark and disembark our guests.ways. In addition, these extreme weather conditions could result in increased wave and wind activity, which would make it more challenging to sail and dock our ships and could cause sea/motion sickness among guests and crew. Theseany other events could have an adverse impact on the safety and satisfaction of cruising and could have an adverse impact on our net revenue yields and profitability. Additionally, these extreme weather conditions could cause property damage to our ships, port and related commercial and business facilities and other assets and impact our ability to provide our cruise products and services as well as to obtain insurance coverage for operations in such areas at reasonable rates.
Incidents involving cruise ships, in particular our cruise ships, and media coverage thereof, as well as adverse media publicity concerning the cruise vacation industry in general, or unusual weather patterns or other natural disasters or disruptions, such as hurricanes and earthquakes, could impact demand for our cruises. In addition, any incidents which impact the travel industry more generally may negatively impact our guests’ or crew’s ability or desire to travel to or from our ships and/or interrupt our ability to obtain servicesthe supply of critical goods and goods from key vendors in our supply chain. Any of the foregoing could have an adverse impact on our net revenue yields and profitability.services.
Maintaining a good reputation is critical to our business. Reports and media coverage of ship incidents at sea or while in port, including missing guests, improper conduct by our employees, guests or agents, crimes, dissatisfied guests, crew and guest illnesses, such as incidents of stomach flu and other contagious diseases, security breaches, terrorist threats and attacks and other adverse events can result in negative publicity, which could lead to a negative perception regarding the safety of our ships and the satisfaction of our guests. In addition, negative publicity regarding adverse environmental impacts of cruising, such as climate change and oil spills, could diminish our reputation. The considerable expansion in the use of social media over recent years has increased the ways in which our reputation can be impacted, and the speed with which it can occur. Anything that damages our reputation, whether or not justified, could have an adverse impact on demand, which could lead to price reductions and a reduction in our net revenue yields and profitability.
c. Changes in and compliancenon-compliance with laws and regulations under which we operate, such as those relating to health, environment, health, safety and security, data privacy and protection, taxanti-corruption, economic sanctions, trade protection and anti-corruption under which we operatetax may lead to litigation, enforcement actions, fines, or penalties, and reputational damage
We are subject to numerous international, national, state and local laws, regulations, treaties and treaties covering many areas, including social issues,other legal requirements that govern health, environmental, safety and security data privacymatters in relation to our guests, crew and protection,ships. These requirements change regularly, sometimes on a daily basis, depending on the itineraries of our ships and tax. Failurethe ports and countries visited. If we violate or fail to comply with any of these laws, regulations, treaties and agreements, including local cabotageother requirements we could be, and have previously been, fined or otherwise sanctioned by regulators. In addition, there is increased global focus on climate change, which may lead and has ledto
additional regulatory requirements. We are subject to enforcement actions, fines, civil or criminal penalties or the assertion of litigation claims and damages. These issues are, and we believe will continue to be, an area of focusa court-ordered environmental compliance plan supervised by the relevant authorities throughoutU.S. District Court for the world. Accordingly, new legislation, regulations or treaties, or changes thereto, could impactSouthern District of Florida, which is operative until at least April 2022 and subjects our operations to additional review and would likely subject usother obligations. Failure to increasedcomply with the requirements of this environmental compliance costsplan or other special conditions of probation could result in fines, which the court has imposed in the future. In addition, training of crew may become more time consumingpast, and may increaserestrictions on our operating costs due to increasing regulatory and other requirements.operations.
Environmental laws and regulations or liabilities arising from past or future releases of, or exposure to, hazardous substances or vessel discharges, including ballast water and waste disposal, could materially increase our cost of compliance or otherwise adversely affect our business, profitability and financial condition. Some environmental groups have lobbied for more stringent regulation of cruise ships. Various agencies and regulatory organizations have enacted or are considering new regulations or policies, such as stricter emission limits to reduce GHG effects, which could adversely impact the cruise industry.
Our guest and employee relationships provide us with access to sensitive data. We are subject to laws and requirements related to the treatment and protection of sensitive data. We may be subject to legal liability and reputational damage ifdata in the jurisdictions where we do not comply with data privacy and protection regulations.operate. Various governments, agencies and regulatory organizations have enacted andor are considering new regulationsrules and implementation of rules for existing regulations. Additional requirements could negatively impact our ability to market cruises to consumers and increase our costs.
We are also subject to compliance with income tax laws, regulations and income tax treaties in the jurisdictions where we operate. We believe that substantially all of the income earned by Carnival Corporation, Carnival plc and their ship owning or operating subsidiaries qualifies for taxation based on ship tonnage, is exempt from taxation or is otherwise subject to minimal taxes in the jurisdictions where the entities are incorporated or do business.
We believe that Panama and the jurisdictions where the ship owning and operating subsidiaries of Carnival Corporation are formed are equivalent exemption jurisdictions for purposes of Section 883 of the Internal Revenue Code. The laws of Panama and the other jurisdictions where our ships are owned or operated are subject to change and, in the future, may no longer qualify as equivalent exemption jurisdictions. Moreover, changes could occur in the future with respect to the trading volume or trading frequency of Carnival Corporation shares, affecting Carnival Corporation’s status as a publicly-traded corporation for purposes of Section 883.
The IRS interpretation of Section 883 could also differ materially from ours. In addition, provisions of the Internal Revenue Code, including Section 883, are subject to legislative change at any time. Accordingly, it is possible that Carnival Corporation and its ship-owning or operating subsidiaries whose tax exemption is based on Section 883 could lose this exemption.
There is no authority that directly addresses the effect, if any, of a DLC arrangement on the availability of benefits under treaties and, accordingly, their application to our operations is not free from doubt. The applicable treaties may be revoked by either applicable country, replaced or modified with new agreements that treat income from international operation of ships differently than the agreements currently in force or may be interpreted by one of its countries differently from us.
If we did not qualify for tonnage tax, exemption, treaties or minimal taxes, or if the laws that provide for these tax systems were changed, we would have significantly higher income tax expense. In many jurisdictions, the benefit of tonnage tax or preferential tax regimes would be replaced with taxation at normal statutory rates. In the absencecourse of Section 883 or an applicable income tax treaty in the U.S.,doing business, we would be subject to the net incomecollect guest, employee, company and branch profits tax regimes of Section 882other third-party data, including personally identifiable information and Section 884 of the Internal Revenue Code. In combination, these provisions would result in the taxation of our U.S. source shipping income, net of applicable deductions, at a current federal corporate income tax rate of up to 35% (as of November 30, 2017), state income tax rates would vary and our net after-tax income would be potentially subject to a further branch profits tax of 30% (as of November 30, 2017), unless a lower treaty rate applies.other sensitive data.
We are subject to the examination of our income tax returns by tax authorities in the jurisdictions where we operate. There can be no assurance that the outcome from these examinations will not adversely affect our profitability.
As budgetary constraints continue to adversely impact the jurisdictions in which we operate, increases in income or other taxes affecting our operations may be imposed. Some social activist groups have lobbied for more taxation on income generated by cruise companies. Certain groups have also generated negative publicity for us. In recent years, certain members of the U.S. Congress have proposed various forms of legislation that would result in higher taxation on income generated by cruise companies.
Our global operations subject us to potential liability under anti-corruption economic sanctions, and other laws and regulations. The Foreign Corrupt Practices Act, the UK Bribery Act and other anti-corruption laws and regulations (“Anti-Corruption Laws”) prohibit corrupt payments by our employees, vendors, or agents. While we devote substantial resources to our global compliance programs and have implemented policies, training, and internal controls designed to reduce the risk of corrupt payments, our employees, vendors, or agents may violate our policies. Our failure to comply with Anti-Corruption Laws could result in significant fines and penalties, criminal sanctions against us, our officers, or our employees, prohibitions or limitations on the conduct of our business, and damage to our reputation. Operations outside the U.S.We may also be affected by changes in economic sanctions, trade protection laws, policies and other regulatory requirements affecting trade and investment.
We may beare subject to legal liabilitycompliance with tax laws, regulations and reputational damage iftreaties in the jurisdictions in which we improperly sell goodsare incorporated or otherwise operate improperly in areasoperate. These tax laws, regulations and treaties are subject to economic sanctions such as Crimea, Iran, North Korea, Cuba, Sudan, and Syria or if we improperly engage in business transactions with persons subject to economic sanctions.
These various international laws and regulations could lead and has led to enforcement actions, fines, civil or criminal penalties or the assertion of litigation claims and damages. In addition, improper conduct by our employees or agents could damage our reputation and lead to litigation or legal proceedings that couldchange at any time, which may result in significant awards or settlements to plaintiffssubstantially higher tax liabilities. Additionally, the relevant authorities’ interpretation of tax laws, regulations and civil or criminal penalties, including substantial monetary fines. Such eventstreaties could lead to an adverse impact on our financial condition or profitability, even if the monetary damage is mitigated by our insurance coverage.differ materially from ours.
As a result of our ship or other incidents, litigation claims, enforcement actions and regulatory actions and investigations, including, but not limited to, those arising from personal injury, loss of life, loss of or damage to personal property, business
interruption losses or environmental damage to any affected coastal waters and the surrounding areas, may be asserted or brought against various parties including us. The time and attention of our management may also be diverted in defending such claims, actions and investigations. We may also incur costs both in defending against any claims, actions and investigations and for any judgments, fines, civil or criminal penalties if such claims, actions or investigations are adversely determined and not covered by our insurance policies.
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| d. | DisruptionsBreaches in data security and lapses in data privacy as well as disruptions and other damages to our principal offices, information technology operations and othersystem networks and operations, breaches in data security, lapses in data privacy, and failure to keep pace with developments in technology may adversely impact our business operations, the satisfaction of our guests and crew and lead to reputational damage |
We may be impacted by breaches in data security and lapses in data privacy, which occur from time to time. These can vary in scope and intent from economically driven attacks to malicious attacks targeting our key operating systems with the intent to disrupt or compromise our shoreside and shipboard operations. Like many companies, we have been and continue to be subject to unauthorized access or use of digital systems and networks through human error or for purposes of misappropriating assets or obtaining sensitive financial, medical or other personal or business information.
Our business continues to demand the use of sophisticated systemsprincipal offices, information technology operations and technology.system networks may be impacted by actual or threatened natural disasters (for example, hurricanes, earthquakes, floods, fires, tornadoes, tsunamis, typhoons and volcanic eruptions) or other disruptive events. Our ability to increase revenues and control costs, as well asmaritime and/or shoreside operations, including our ability to manage our inventory of cabins held for sale and set pricing, control costs, and serve our guests, most effectively depends in part on the reliability of our information technology operations and system networks andas well as our ability to refine and update to more advanced systems and technologies. If we are unable to do so on a timely basis or within reasonable cost parameters, our business could suffer.
We use communication applications, information technology and other systems to manage our inventory of cabins held for sale and set pricing in order to maximize our revenue yields and to optimize the effectiveness and efficiency of our shoreside and shipboard operations. Possible system outages and the resulting downtime could have adverse consequences on our ability to run and manage our business.
Gaining unauthorized access to digital systems and networks for purposes of misappropriating assets or sensitive financial, medical or other personal or business information, corrupting data, causing shoreside or shipboard operational disruptions and other cyber attack risks could adversely impact our reputation, guest services and satisfaction, employee relationships, business plans, ship safety and costs.
As the use of the internet and sensitive data expands, regulators are addressing the risks related to technology and cybersecurity with enhanced regulations. We have initiated a global program to meet the compliance requirements for EU data privacy regulations. If we or our vendors experience significant data security breaches, privacy failures, or fail to detect and appropriately respond, we could be exposed to government enforcement actions and private litigation.
Our principal offices are located in Australia, Germany, Italy, the UK and the U.S. Although we have developed disaster recovery and similar business contingency plans, actual or threatened natural disasters (for example, hurricanes, earthquakes, floods, fires, tornados, tsunamis, typhoons and volcanic eruptions) or similar events in these locations may have a material impact on our business continuity, reputation and profitability.
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| e. | Ability to recruit, develop and retain qualified shipboard personnel who live on ships away from home for extended periods of time may adversely impact our business operations, guest services and satisfaction |
Our success is dependent upon our personnel and our ability to recruit and train high quality employees. We hire a significant number of new crewqualified shipboard personnel each year and, thus, our ability to adequately recruit, develop and retain our crewthese individuals is critical to our cruise business. We must continue to recruit, develop, retain and motivate our shipboard personnel to enable us to maintain our current business and support our projected growth.
We believe that incidentssuccess. Incidents involving cruise ships and the related adverse media publicity, adverse economic conditions that negatively affect our profitability and overcapacity inincreasing demand as a result of our and the vacation regionindustry’s projected growth could alsonegatively impact our ability to recruit, develop and retain sufficient qualified shipboard personnel.
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| f. | Increases in fuel prices, changes in the types of fuel consumed and availability of fuel supply may adversely impact our scheduled itineraries and costs |
Economic,We may be impacted, and have been impacted in the past, by economic, market and political conditions around the world, such as fuel demand, regulatory requirements, supply disruptions and related infrastructure needs, which make it difficult to predict the future price and availability of fuel. Future increases in the global price of fuel would increase the cost of our cruise ship operations as well as some of our other expenses, such as crew travel, freight and commodity prices. Furthermore, volatilityIncreases in airfares, which could result from increases in the price of fuel, prices could have a material adverse effect onwould increase our operations, financial condition and liquidity. We may be unable to implement additional fuel conservation initiatives, increase ticket prices or collect fuel supplements to help fully or partially offset these fuel price increases.
Various agencies and regulatory authorities have issued rules related to emissions. The cost and availability of appropriate fuel supplies or the effectivenessguests’ overall vacation costs as many of our emissions mitigation equipment may negatively impactguests depend on airlines to transport them to or from the airports near the ports where our operations, increasing costscruises embark and reducing profitability.disembark.
CertainAs a result of changes in regulations, we expect to consume a larger percentage of low sulfur fuel in 2020, which will likely increase our fuel costs. Additionally, certain of our newbuilds that entered into service in 2016 and thereafterships are designed to use LNG as atheir primary fuel source. At this time, there is not a liquid spot market for marine LNG and purchasing LNG is usually made through long-term contracts. Further, the marine LNG distribution infrastructure is in the early stages of development and there arewith a limited number of suppliers. In addition, we may be subject to new regulations covering the use and storage of LNG onboard our ships and we may experience difficulties in operating and maintaining new LNG-based engine technology. The pricing, availability and regulations for LNG could adversely affect our profitability by changing itineraries and increasing costs.
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| g. | Fluctuations in foreign currency exchange rates may adversely impact our financial results |
We earn revenues, pay expenses, purchase and own assets and incur liabilities in currencies other than the U.S. dollar, resultingdollar. Additionally, our shipbuilding contracts are typically denominated in translational and transactionaleuros. Movements in foreign currency risks (“currency risk”).
We report currency transactions in the functional currencies of our reporting units. Because our consolidated financial statements are presented in U.S. dollars, we translate revenues and expenses into U.S dollars at exchange rates in effect during the reporting period, and translate assets and liabilities into U.S. dollars at exchange rates in effect at the end of each reporting period. This subjects us to “foreign currency translational” risk. The strengthening of the U.S. dollar against the functional currencies of our foreign operations will adversely affect our U.S. dollar financial results.
Substantially all of our operations also have non-functional currency risk related to their international net revenue yields. In addition, a portion of our operating expenses is denominated in non-functional currencies. Accordingly, we have “foreign currency transactional” risk related to changes in the exchange rates for our revenues and expenses that are in a currency other than the entity’s functional currency. The strengthening of the functional currency against other currencies will reduce the functional currency revenues and expenses and will generally adversely affect our profitability.
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| h. | Overcapacity and competition in the cruise ship and land-based vacation industry may lead to a decline in our cruise sales, pricing and destination options |
Since the cruise industry relies on long-lived ships, we face the risk that our industry’s capacity will grow beyond its demand. The wider vacation industryWe may also facebe impacted by increases in land-based vacation capacity which may impact us as well. We typically aim to fill our new capacity at favorable revenue yields despitein the new competing cruise and land-based vacation industry, which may result in capacity growth. Also, to the extent that wegrowth beyond demand, either globally or our competitors deploy ships tofor a region, or for a particular itinerary and the resulting capacity in that region exceeds the demand, we may lower pricing and our profitability may be lower than initially anticipated. Furthermore, the used cruise ship market is small and as new cruise ships enter the industry, older ships become less competitive. Accordingly, if we need to dispose of a ship, we cannot be assured of finding a viable buyer to purchase it at a price that meets our expectations, which could result in ship impairment charges and losses on ship disposals. Should net revenue yields be negatively impacted, our profitability and financial condition could be adversely affected. In addition, increased cruise capacity could impact our ability to recruit, develop and retain qualified crew, including officers, at competitive rates and, therefore, increase our shipboard employee costs.
itinerary. We face competition from other cruise brands on the basis of cruise pricing, travel agent preference and theoverall experience, destinations, types and sizes of ships and cabins, servicestravel agent preferences and destinations being offered by them to cruise guests. In addition, new cruise competitors with existing brand appeal may choose to enter the cruise industry or there may be other new cruise competitors that may choose to enter the established or emerging regions. We try to differentiate ourselves from our cruise competitors by offering a wide variety of brands, itineraries, products and services to our guests, but the acceptance of each offering is not certain and consumers’ preferences are always subject to change.value. In addition, we operate in the wider vacation industry and we risk losing business, not only to other cruise lines, but also tocompete with land-based vacation operators. Inalternatives throughout the event that we do not compete effectively with other cruise companiesworld on the basis of overall experience, destinations and other vacation alternatives, our profitability and financial condition could be adversely affected.value.
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| i. | Continuing financial viability of our travel agent distribution system, air service providers and other key vendors in our supply chain, as well as reductions in the availability of, and increases in the prices for, the services and products provided by these vendors |
Our guests primarily book their cruises through independent travel agents and tour operators. These parties generally sell and market our cruises on a nonexclusive basis. Our competitors may offer higher commissions and incentives and thus adversely impact our business. Significant disruptions, contractions or consolidations to our travel agents distribution system, such as those caused by a reduction in travel and related commission income as a result of an economic slowdown could have an adverse effect on our net revenue yields and profitability. In addition, we currently rely on our travel agents and tour operators to source and arrange for our guests, if such agents and operators cannot successfully source guests, it will adversely impact our cash flows and operations.
Many of our guests and substantially all our crew depend on scheduled or chartered commercial airline services to transport them to or from the airports near the ports where our cruises embark and disembark. Changes or disruptions in commercial or chartered airline services as a result of strikes, labor unrest, financial instability or viability, adverse weather conditions, airport delays, consolidation of carriers, or other events or the lack of availability due to schedule changes or a high level of airline bookings could adversely affect our ability to deliver guests and crew to or from our cruise ships and increase our costs which would, in turn, have an adverse effect on our profitability. In addition, increases in the prices of airfares would increase the overall vacation price to our guests.
Economic downturns may impact the financial viability of other key vendors in our supply chain and the interruption in the services or goods we purchase from them could adversely impact our operations and profitability.
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j. | Inability to implement our shipbuilding programs and ship repairs, maintenance and refurbishments on terms that are favorable or consistent with our expectations, as well as increases to our repairs and maintenance expenses and refurbishment costs as our fleet ages |
The construction, repair, maintenance and refurbishment of cruise ships are complex processes and involve risks similar to those encountered in other large and sophisticated construction, repair, maintenance and refurbishment projects. As our fleet ages, our repair and maintenance expenses will increase. In addition, other events, such as work stoppages, other labor actions, insolvencies, “force majeure” events or other financial difficulties experienced at the shipyards and their subcontractors and suppliers who build, repair, maintain or refurbish our ships could also delay or prevent the delivery of our ships under construction and prevent or delay the completion of the refurbishment, repair and maintenance of existing ships in our fleet. These events could adversely affect our profitability, including delays or cancellations of cruises or unscheduled dry-docks and repairs. In addition, the consolidation of the control of certain cruise shipyards or cruise shipyard voluntary capacity reductions or insolvencies could result in less shipyard availability thus reducing competition and increasing prices. Furthermore, the lack of qualified shipyard repair facilities could result in the inability to repair and maintain our ships on a timely basis, which could also result in reduced profitability.
The cost of shipbuilding orders that we may place in the future that is denominated in a different currency than our cruise brands’ or the shipyards’ functional currency is expected to be affected by foreign currency exchange rate fluctuations. These foreign currency exchange rate fluctuations may affect our decisions to order new cruise ships. In addition, the prices of various commodities that are used in the construction of ships, such as steel, can be subject to volatile price changes and, accordingly, the cost of future newbuilds may increase, which could have an adverse impact on our profitability.
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k. | Geographic regions in which we try to expand our business may be slow to develop andor ultimately not develop how we expect |
As we continue to expand our global presence, it requires, among other things, significant levels of management resources, capital and other investments. For example, we may be required to localize our cruise products and services to conform to local cultures, standards, policies and regulations. As a result, it may be more difficult for us to replicate our successful core business models and we may not be able to recover our investments in these markets. In addition, we cannot be certain that these markets, such as China, will ultimately develop as we expect, which could alsoexpect.
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| j. | Inability to implement our shipbuilding programs and ship repairs, maintenance and refurbishments may adversely impact our business operations and the satisfaction of our guests |
We may be impacted by unforeseen events, such as work stoppages, insolvencies, “force majeure” events or other financial difficulties experienced by shipyards, their subcontractors and our suppliers. This may result in less shipyard availability resulting in delays or preventing the growth and profitabilitydelivery of our business.ships under construction and/or the completion of the repair, maintenance, or refurbishment of our existing ships. This may lead to potential delays or cancellations of cruises. In addition, the prices of various commodities that are used in the construction of ships and for repair, maintenance and refurbishment of existing ships, such as steel, are subject to volatility.
Cautionary Note Concerning Factors That May Affect Future Results
Some of the statements, estimates or projections contained in this Form 10-Kdocument are “forward-looking statements” that involve risks, uncertainties and assumptions with respect to us, including some statements concerning future results, outlooks, plans, goals and other events which have not yet occurred. These statements are intended to qualify for the safe harbors from liability provided by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical facts are statements that could be deemed forward-looking. These statements are based on current expectations, estimates, forecasts and projections about our business and the industry in which we operate and the beliefs and assumptions of our management. We have tried, whenever possible, to identify these statements by using words like “will,” “may,” “could,” “should,” “would,” “believe,” “depends,” “expect,” “goal,” “anticipate,” “forecast,” “project,” “future,” “intend,” “plan,” “estimate,” “target,” “indicate”“indicate,” “outlook,” and similar expressions of future intent or the negative of such terms.
Forward-looking statements include those statements that may impactrelate to our outlook and financial position including, but not limited to, the forecasting of our:statements regarding:
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• Net revenue yields | • Net cruise costs, excluding fuel per available lower berth day |
• Booking levels | • Estimates of ship depreciable lives and residual values |
• Pricing and occupancy | • Goodwill, ship and trademark fair values |
• Interest, tax and fuel expenses | • Liquidity |
• Currency exchange rates | • Adjusted earnings per share |
Certain of the risks we are exposed to are identified in this Item 1A. “Risk Factors.” This item contains important cautionary statements and a discussion of the known factors that we consider could materially affect the accuracy of our forward-looking
statements and adversely affect our business, results of operations and financial position. It is not possible to predict or identify all such risks. There may be additional risks that we consider immaterial or which are unknown.
Forward-looking statements should not be relied upon as a prediction of actual results. Subject to any continuing obligations under applicable law or any relevant stock exchange rules, we expressly disclaim any obligation to disseminate, after the date of this Form 10-K,document, any updates or revisions to any such forward-looking statements to reflect any change in expectations or events, conditions or circumstances on which any such statements are based.
Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
As of November 30, 2017,2019, the Carnival Corporation and Carnival plc headquarters and our larger shoreside locations are as follows:
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| Location | | Square Footage (in thousands) | | Own/Lease | | Principal Operations |
| Miami, FL, U.S.A. | | 463/5561 | | Own/Lease | | Carnival Corporation and Carnival Cruise Line |
| Genoa, Italy | | 246/66 | | Own/Lease | | AIDACosta and CostaAIDA |
| Santa Clarita, CA, U.S.A. | | 311 | | Lease | | Princess Cruises, Holland America Line Princess Cruises and Seabourn |
| Almere, Netherlands | | 253 | | Own | | Arison Maritime Center |
| Rostock, Germany | | 224 | | Own | | AIDACosta and CostaAIDA |
| Seattle, WA, U.S.A. | | 175 | | Lease | | Princess Cruises, Holland America Line Princess Cruises and Seabourn |
| Southampton, England | | 150 | | Lease | | Carnival plc, P&O Cruises (UK) and Cunard |
| Hamburg, Germany | | 137150 | | Lease | | AIDACosta and CostaAIDA |
| Sydney, NSW, Australia | | 37 | | Lease | | Princess Cruises and P&O Cruises (Australia) and Princess Cruises |
| Shanghai, China | | 32 | | Lease | | Costa |
Information about our cruise ships, including the number each of our cruise brands operate, as well as information regarding our cruise ships under construction may be found under Part I. Item 1. Business. C. “Our Global Cruise Business.” In addition, we own, lease or have controlling interests in port destinations, private islands, hotels, and lodges.
Item 3. Legal Proceedings.Proceedings.
As part of the previously disclosed settlement approved by the U.S. District Court of the Southern District of Florida in June 2019, Carnival Corporation paid a financial penalty, and is subject to ongoing oversight, environmental goals and certain reporting requirements, as well as a restructuring of its compliance function, relating to the violation of probation conditions for a plea agreement entered into by Princess Cruises and the U.S. Department of Justice in 2016. We may be subject to further conditions and penalties in the event of future environmental incidents.
As previously disclosed, on May 19, 2017, Holland America Line15, 2018, the Marseilles, France Public Prosecutor alleged that Carnival plc and Princess Cruises notified the National Oceaniccaptain of P&O Cruises’ Azura breached the French Environmental Code governing the sulfur content of fuel used during the vessel’s passage through French territorial waters. On November 26, 2018, the Tribunal de Grande Instance imposed a fine, costs and Atmospheric Administration (“NOAA”) regarding discharges made by certain vesselsdamages against Carnival plc and the captain for an aggregate of €118,000. On November 12, 2019, in response to our application to the recently expanded areacourt of appeal, a verdict overturning the original conviction was handed down. The prosecution has appealed to the French Supreme Court. We continue to believe that we have a meritorious defense to this claim and that the ultimate outcome of the National Marine Sanctuary in the Farallones Islands. NOAA continues to conduct an investigation. We believe the ultimate outcomeproceedings will not have a material impact on our consolidated financial statements.
As previously disclosed, on August 28, 2018, P&O Cruises (Australia) notified the Maritime Accident Investigation Branch and the Australian Maritime Safety Authority of an inadvertent discharge of liquid food waste mixed into grey water off of Pacific Explorer while it was inside the Great Barrier Reef Marine Park on August 26, 2018. We believe the ultimate outcome of any investigation and any penalty will not have a material impact on our consolidated financial statements.
Item 4. Mine Safety Disclosures.
None.
Executive Officers of the Registrants
The table below sets forth the name, age, years of service and title of each of our executive officers. Titles listed relate to positions within Carnival Corporation and Carnival plc unless otherwise noted.
|
| | | | | |
|
Age | | Years of Service (a) | | Title |
| Micky Arison | 68 | | 46 | | Chairman of the Boards of Directors |
| David Bernstein | 60 | | 19 | | Chief Financial Officer and Chief Accounting Officer |
| Arnold W. Donald | 63 | | 17 | | President and Chief Executive Officer and Director |
| Stein Kruse | 59 | | 18 | | Group Chief Executive Officer of Holland America Group and Carnival UK |
| Arnaldo Perez | 57 | | 25 | | General Counsel and Secretary |
| Michael Thamm | 54 | | 24 | | Group Chief Executive Officer of Costa Group and Carnival Asia |
| |
(a) | Years of service with us or Carnival plc predecessor companies. |
Business Experience of Executive Officers
Micky Arison has been Chairman of the Boards of Directors since 1990 andOn October 23, 2019, a Director since 1987. Hecomplaint was Chief Executive Officer from 1979 to 2013.
David Bernstein has been Chief Financial Officer since 2007 and Chief Accounting Officer since 2016. From 2003 to 2007, he was Treasurer.
Arnold W. Donald has been President and Chief Executive Officer since 2013. He has beenfiled by a Director since 2001.
Stein Kruse has been the Group Chief Executive Officer of Holland America Group and Carnival UK since July 2017. He was Chief Executive Officer of Holland America Group from 2013 to July 2017. From 2004 to 2013, he was President and Chief Executive Officer of Holland America Line.
Arnaldo Perez has been General Counsel and Secretary since 1995.
Michael Thamm has been Group Chief Executive Officer of Costa Group since 2012 and of Carnival Asia since December 2016.
PART II
Item 5. Market for Registrants’ Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
A. Market Information
The information required by Item 201(a) of Regulation S-K, Market Information, is shown in Exhibit 13 and is incorporated by reference into this Form 10-K.
B. Holders
The information required by Item 201(b) of Regulation S-K, Holders, is shown in Exhibit 13 and is incorporated by reference into this Form 10-K.
C. Dividends
Carnival Corporation and Carnival plc declared quarterly cash dividends on all of their common stock and ordinary shares as follows:
|
| | | | | | | | | | | | | | | |
| | Quarters Ended |
| | February 28/29 | | May 31 | | August 31 | | November 30 |
| 2017 | $ | 0.35 |
| | $ | 0.40 |
| | $ | 0.40 |
| | $ | 0.45 |
|
| 2016 | $ | 0.30 |
| | $ | 0.35 |
| | $ | 0.35 |
| | $ | 0.35 |
|
All dividends for both Carnival Corporation and Carnival plc are declared in U.S. dollars. If declared, holders of Carnival Corporation common stock and Carnival plc American Depository Shares receive a dividend payable in U.S. dollars. The dividends payable for Carnival plc ordinary shares are payable in sterling, unless the shareholders elect to receive the dividends in U.S. dollars. Dividends payable in sterling will be converted from U.S. dollars into sterling at the U.S. dollar to sterling exchange rate quoted by the Bank of England in London at 12:00 p.m. on the next combined U.S. and UK business day that follows the quarter end.
The payment and amount of any future dividend is within the discretion of the Boards of Directors. Our dividends were and will be based on a number of factors, including our earnings, liquidity position, financial condition, booking trends, capital requirements, credit ratings and the availability and cost of obtaining new debt. We cannot be certain that Carnival Corporation and Carnival plc will continue their dividend in the future, and if so, the amount and timing of such future dividends are not determinable and may be different than the levels and have a different timing than are disclosed above.
D. Securities Authorized for Issuance under Equity Compensation Plans
The information required by Item 201(d) of Regulation S-K is incorporated by reference to Part III. Item 12 of this Form 10-K.
E. Performance Graph
The information required by Item 201(e) of Regulation S-K, Performance Graph, is shown in Exhibit 13 and is incorporated by reference into this Form 10-K.
F. Issuer Purchases of Equity Securities; Use of Proceeds from Registered Securities
I. Repurchase Program
Under a share repurchase program effective 2004, we are authorized to repurchase Carnival Corporation common stock and Carnival plc ordinary shares (the “Repurchase Program”). On April 6, 2017, the Boards of Directors approved a modification of the general authorization under the Repurchase Program, which replenished the remaining authorized repurchases at the time of the approval to $1.0 billion. The Repurchase Program does not have an expiration date and may be discontinued by our Boards of Directors at any time.
During the three months ended November 30, 2017, repurchases of Carnival Corporation common stock pursuant to the Repurchase Program were as follows:
|
| | | | | | | | | | | |
| Period | | Total Number of Shares of Carnival Corporation Common Stock Purchased (in millions) | | Average Price Paid per Share of Carnival Corporation Common Stock | | Maximum Dollar Value of Shares That May Yet Be Purchased Under the Repurchase Program (in millions) |
| September 1, 2017 through September 30, 2017 | | 0.8 |
| | $ | 66.31 |
| | $ | 760 |
|
| October 1, 2017 through October 31, 2017 | | 0.1 |
| | $ | 66.25 |
| | $ | 673 |
|
| November 1, 2017 through November 30, 2017 | | 0.1 |
| | $ | 64.87 |
| | $ | 587 |
|
| | | 1.0 |
| | $ | 66.23 |
| | |
During the three months ended November 30, 2017, repurchases of Carnival plc ordinary shares pursuant to the Repurchase Program were as follows:
|
| | | | | | | | | | | |
| Period | | Total Number of Shares of Carnival plc Purchased (in millions) | | Average Price Paid per Share of Carnival plc | | Maximum Dollar Value of Shares That May Yet Be Purchased Under the Repurchase Program (in millions) |
| September 1, 2017 through September 30, 2017 | | 0.2 |
| | $ | 64.41 |
| | $ | 760 |
|
| October 1, 2017 through October 31, 2017 | | 1.2 |
| | $ | 65.20 |
| | $ | 673 |
|
| November 1, 2017 through November 30, 2017 | | 1.3 |
| | $ | 65.44 |
| | $ | 587 |
|
| | | 2.7 |
| | $ | 65.24 |
| | |
No shares of Carnival Corporation common stock or Carnival plc ordinary shares were purchased outside of publicly announced plans or programs.
II. Stock Swap Programs
In addition to the Repurchase Program, we have programs that allow us to obtain an economic benefit when either Carnival Corporation common stock is trading at a premium to the price of Carnival plc ordinary shares or Carnival plc ordinary shares are trading at a premium to Carnival Corporation common stock (the “Stock Swap Programs”). For example:
| |
Ÿ | In the event Carnival Corporation common stock trades at a premium to Carnival plc ordinary shares, we may elect to sell shares of Carnival Corporation common stock, at prevailing market prices in ordinary brokers’ transactions and repurchase an equivalent number of Carnival plc ordinary shares in the UK market.
|
| |
Ÿ | In the event Carnival plc ordinary shares trade at a premium to Carnival Corporation common stock, we may elect to sell ordinary shares of Carnival plc, at prevailing market prices in ordinary brokers’ transactions and repurchase an equivalent number of shares of Carnival Corporation common stock in the U.S. |
Any realized economic benefit under the Stock Swap Programs is used for general corporate purposes, which could include repurchasing additional stock under the Repurchase Program.
Under the Stock Swap Programs effective 2008, the Boards of Directors have made the following authorizations:
In January 2017, to sell up to 22.0 million of Carnival Corporation common stock in the U.S. market and repurchase up to 22.0 million of Carnival plc ordinary shares in the UK market.
In February 2016, to sell up to 26.9 million of existing sharespurported shareholder of Carnival plc in the UK marketNew York Supreme Court, New York County, purporting to allege derivative claims on Carnival plc’s behalf for breach of fiduciary duty and repurchase up to 26.9 million shares of Carnival Corporation common stock incorporate waste against the U.S. market.
Any sales of Carnival Corporation shares and Carnival plc ordinary shares have been or will be registered under the Securities Act of 1933. During the three months ended November 30, 2017, no Carnival Corporation common stock or Carnival plc ordinary shares were sold or repurchased under the Stock Swap Programs.
III. Carnival plc Shareholder Approvals
Carnival plc ordinary share repurchases under both the Repurchase Program and the Stock Swap Programs require annual shareholder approval. The existing shareholder approval is limited to a maximum of 21.6 million ordinary shares and is valid until the earlier of the conclusionmembers of the Carnival plc 2018 annual general meeting or July 4, 2018.Board of Directors (the “Board”). The allegations relate to the criminal proceedings by the U.S. Department of Justice against Princess Cruise Lines, Ltd., which we previously disclosed. Plaintiff seeks declaratory judgment that the Board breached their duties to Carnival plc, monetary damages and restitution to Carnival plc, punitive damages from the Board to Carnival plc, and an award of Plaintiff’s attorney’s fees and costs. The defendants have not yet responded to the complaint.
Item 4. Mine Safety Disclosures.
None.
Item 6. Selected Financial Data.
The information required by Item 6. Selected Financial Data, is shown in Exhibit 13 and is incorporated by reference into this Form 10-K.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The information required by Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, is shown in Exhibit 13 and is incorporated by reference into this Form 10-K.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
The information required by Item 7A. Quantitative and Qualitative Disclosures About Market Risk, is shown in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Exhibit 13 and is incorporated by reference into this Form 10-K.
Item 8. Financial Statements and Supplementary Data.
The financial statements, together with the report thereon of PricewaterhouseCoopers LLP, dated January 29, 2018,28, 2020, and the Selected Quarterly Financial Data (Unaudited) are shown in Exhibit 13 and are incorporated by reference into this Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
A. Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, is recorded, processed, summarized and reported, within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in our reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.
Our President and Chief Executive Officer and our Chief Financial Officer and Chief Accounting Officer have evaluated our disclosure controls and procedures and have concluded, as of November 30, 2017,2019, that they are effective as described above.
B. Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Securities Exchange Act of 1934 Rule 13a-15(f). Our management, with the participation of our President and Chief Executive Officer and our Chief Financial Officer and Chief Accounting Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting based on the 2013 Internal Control – Integrated Framework (the “COSO
“COSO Framework”). Based on this evaluation under the COSO Framework, our management concluded that our internal control over financial reporting was effective as of November 30, 2017.2019.
PricewaterhouseCoopers LLP, the independent registered certified public accounting firm that audited our consolidated financial statements incorporated in this Form 10-K, has also audited the effectiveness of our internal control over financial reporting as of November 30, 20172019 as stated in their report, which is shown in Exhibit 13 and is incorporated by reference into this Form 10-K.
C. Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during the quarter ended November 30, 20172019 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
Item 9B. Other Information.
None.On January 27, 2020, Debra Kelly-Ennis resigned from her position as a Director of Carnival Corporation and Carnival plc, including her role as a member of our HESS Committees effective that same day. Her resignation was not the result of any disagreement between her and the company.
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
Directors
Information regarding our directors, as required by Item 10, is incorporated herein by reference from the Carnival Corporation and Carnival plc joint definitive Proxy Statement to be filed with the U.S. Securities and Exchange Commission not later than 120 days after the close of the 2019 fiscal year.
Information About Our Executive Officers
The table below sets forth the name, age, years of service and title of each of our executive officers. Titles listed relate to positions within Carnival Corporation and Carnival plc unless otherwise noted.
|
| | | | | |
|
Age | | Years of Service (a) | | Title |
| Micky Arison | 70 | | 48 | | Chairman of the Boards of Directors |
| David Bernstein | 62 | | 21 | | Chief Financial Officer and Chief Accounting Officer |
| Arnold W. Donald | 65 | | 19 | | President and Chief Executive Officer and Director |
| Stein Kruse | 61 | | 20 | | Group Chief Executive Officer of Holland America Group and Carnival UK |
| Arnaldo Perez | 59 | | 27 | | General Counsel and Secretary |
| Michael Thamm | 56 | | 26 | | Group Chief Executive Officer of Costa Group and Carnival Asia |
| |
| (a) | Years of service with us or Carnival plc predecessor companies. |
Business Experience of Executive Officers
Micky Arison has been Chairman of the Boards of Directors since 1990 and a Director since 1987. He was Chief Executive Officer from 1979 to 2013.
David Bernstein has been Chief Financial Officer since 2007 and Chief Accounting Officer since 2016.
Arnold W. Donald has been President and Chief Executive Officer since 2013. He has been a Director since 2001.
Stein Kruse has been the Group Chief Executive Officer of Holland America Group and Carnival UK since 2017. He was Chief Executive Officer of Holland America Group from 2013 to 2017.
Arnaldo Perez has been General Counsel and Secretary since 1995.
Michael Thamm has been Group Chief Executive Officer of Costa Group since 2012 and of Carnival Asia since 2017.
Corporate Governance
We have adopted a Code of Business Conduct and Ethics that applies to our President and Chief Executive Officer and senior financial officers, including the Chief Financial Officer and Chief Accounting Officer and other persons performing similar functions. Our Code of Business Conduct and Ethics applies to all our other employees and to our directors as well. This Code of Business Conduct and Ethics is posted on our website, which is located at www.carnivalcorp.com and www.carnivalplc.com. We intend to satisfy the disclosure requirement under Item 5.05 of the Form 8-K regarding any amendments to, or waivers from, provisions of this Code of Business Conduct and Ethics by posting such information on our website, at the addresses specified above.
The additional information required by Item 10 is incorporated herein by reference from the Carnival Corporation and Carnival plc joint definitive Proxy Statement to be filed with the U.S. Securities and Exchange Commission not later than 120 days after the close of the 20172019 fiscal year, except that the information concerning the Carnival Corporation and Carnival plc executive officers called for by Item 401(b) of Regulation S-K is included in Part I of this Form 10-K.year.
Item 11. Executive Compensation.
The information required by Item 11 is incorporated herein by reference from the Carnival Corporation and Carnival plc joint definitive Proxy Statement to be filed with the U.S. Securities and Exchange Commission not later than 120 days after the close of the 20172019 fiscal year.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
A. Securities Authorized for Issuance under Equity Compensation Plans
I. Carnival Corporation
Set forth below is a table that summarizes compensation plans (including individual compensation arrangements) under which Carnival Corporation equity securities are authorized for issuance as of November 30, 2017.2019.
| | | Plan category | | Number of securities to be issued upon exercise of warrants and rights (in millions) | | Weighted-average exercise price of outstanding warrants and rights | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (1)) (in millions) | | | Number of securities to be issued upon exercise of warrants and rights (in millions) | | Weighted-average exercise price of outstanding warrants and rights | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (1)) (in millions) | |
| | | (1) | | | | | (1) | | | |
| Equity compensation plans approved by security holders | | 2.3 |
| (a) | - | | 10.0 |
| (b) | | 2.3 |
| (a) | - | | 7.1 |
| (b) |
| Equity compensation plans not approved by security holders | | — |
| |
- | | — |
| | | — |
| |
- | | — |
| |
| | | 2.3 |
| | - | | 10.0 |
| | | 2.3 |
| | - | | 7.1 |
| |
| |
| (a) | Represents 2.3 million of restricted share units outstanding under the Carnival Corporation 2011 Stock Plan. |
| |
| (b) | Includes Carnival Corporation common stock available for issuance as of November 30, 20172019 as follows: 2.11.9 million under the Carnival Corporation Employee Stock Purchase Plan, which includes 28,83944,873 shares subject to purchase during the current purchase period and 7.95.2 million under the Carnival Corporation 2011 Stock Plan. |
II. Carnival plc
Set forth below is a table that summarizes compensation plans (including individual compensation arrangements) under which Carnival plc equity securities are authorized for issuance as of November 30, 2017.2019.
| |
Plan category | | Number of securities to be issued upon exercise of warrants and rights (in millions) | | Weighted-average exercise price of outstanding warrants and rights | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (1)) (in millions) | | Number of securities to be issued upon exercise of warrants and rights (in millions) | | Weighted-average exercise price of outstanding warrants and rights | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (1)) (in millions) |
| | | (1) | | | | (1) | | |
| Equity compensation plans approved by security holders | | 0.7 |
| (a) | - | | 7.6 |
| | 0.6 |
| (a) | - | | 6.6 |
|
| Equity compensation plans not approved by security holders | | — |
| |
- | | — |
| | — |
| |
- | | — |
|
| | | 0.7 |
| | - | | 7.6 |
| | 0.6 |
| | - | | 6.6 |
|
| |
| (a) | Represents 0.70.6 million restricted share units outstanding under the Carnival plc 2005 Employee Share Plan and Carnival plc 2014 Employee Share Plan. |
The additional information required by Item 12 is incorporated herein by reference to the Carnival Corporation and Carnival plc joint definitive Proxy Statement to be filed with the U.S. Securities and Exchange Commission not later than 120 days after the close of the 20172019 fiscal year.
Items 13 and 14.Certain Relationships and Related Transactions, and Director Independence and Principal Accountant Fees and Services.
The information required by Items 13 and 14 is incorporated herein by reference from the Carnival Corporation and Carnival plc joint definitive Proxy Statement to be filed with the U.S. Securities and Exchange Commission not later than 120 days after the close of the 20172019 fiscal year.
PART IV
Item 15. Exhibits and Financial Statement Schedules.
(a) (1) Financial Statements
The financial statements shown in Exhibit 13 are incorporated herein by reference into this Form 10-K.
(2) Financial Statement Schedules
All schedules for which provision is made in the applicable accounting regulations of the SEC are not required under the related instruction or are inapplicable and, therefore, have been omitted.
(3) Exhibits
The exhibits listed below on the Index to Exhibits are filed or incorporated by reference as part of this Form 10-K.
|
| | | | | | | | |
| INDEX TO EXHIBITS | | | | | | |
| | | Incorporated by Reference |
| Exhibit Number | Exhibit Description | Form | | Exhibit | | Filing Date | | Filed Herewith |
| | | | | | | | |
| Articles of incorporation and by-laws | | | | | | | |
| | | | | | | | | |
| 3.1 | | 8-K | | 3.1 | | 4/17/03 | | |
| | | | | | | | | |
| 3.2 | | 8-K | | 3.1 | | 4/20/09 | | |
| | | | | | | | | |
| 3.3 | | 8-K | | 3.3 | | 4/20/09 | | |
| | | | | | | | | |
| Instruments defining the rights of security holders, including indenture | | | | | | |
| | | | | | | | | |
| 4.1 | | | | | | | | X |
| | | | | | | | | |
| 4.2 | | 10-Q | | 4.1 | | 10/15/03 | | |
| | | | | | | | | |
| 4.3 | | 10-Q | | 4.2 | | 10/15/03 | | |
| | | | | | | | | |
| 4.4 | | S-4 | | 4.3 | | 5/30/03 | | |
| | | | | | | | | |
| 4.5 | | S-3 & F-3 | | 4.10 | | 6/19/03 | | |
| | | | | | | | | |
| 4.6 | | S-3 & F-3 | | 4.16 | | 6/19/03 | | |
| | | | | | | | | |
| 4.7 | | 8-K | | 4.1 | | 4/17/03 | | |
| | | | | | | | | |
| 4.8 | | 8-K | | 4.2 | | 4/17/03 | | |
| | | | | | | | | |
| 4.9 | | 8-K | | 4.3 | | 4/17/03 | | |
|
| | | | | | | | |
| INDEX TO EXHIBITS | | | | | | |
| | | Incorporated by Reference |
| Exhibit Number | Exhibit Description | Form | | Exhibit | | Filing Date | | Filed Herewith |
| | | | | | | | |
| Articles of incorporation and by-laws | | | | | | | |
| | | | | | | | | |
| 3.1 | | 8-K | | 3.1 | | 4/17/03 | | |
| | | | | | | | | |
| 3.2 | | 8-K | | 3.1 | | 4/20/09 | | |
| | | | | | | | | |
| 3.3 | | 8-K | | 3.3 | | 4/20/09 | | |
| | | | | | | | | |
| Instruments defining the rights of security holders, including indenture | | | | | | |
| | | | | | | | | |
| 4.1 | | | | | | | | X |
| | | | | | | | | |
| 4.2 | | 10-Q | | 4.1 | | 10/15/03 | | |
| | | | | | | | | |
| 4.3 | | 10-Q | | 4.2 | | 10/15/03 | | |
| | | | | | | | | |
| 4.4 | | S-4 | | 4.3 | | 5/30/03 | | |
| | | | | | | | | |
| 4.5 | | S-3 & F-3 | | 4.10 | | 6/19/03 | | |
| | | | | | | | | |
| 4.6 | | S-3 & F-3 | | 4.16 | | 6/19/03 | | |
| | | | | | | | | |
| 4.7 | | 8-K | | 4.1 | | 4/17/03 | | |
| | | | | | | | | |
| 4.8 | | 8-K | | 4.2 | | 4/17/03 | | |
| | | | | | | | | |
| 4.9 | | 8-K | | 4.3 | | 4/17/03 | | |
|
| | | | | | | | |
| INDEX TO EXHIBITS | | | | | | |
| | | Incorporated by Reference |
| Exhibit Number | Exhibit Description | Form | | Exhibit | | Filing Date | | Filed Herewith |
| | | | | | | | | |
| 4.10 | | Post
Amend-
ment to
Form F-6 | | 99-a | | 4/15/03 | | |
| | | | | | | | | |
| 4.11 | | S-3 | | 4.1 | | 7/2/09 | | |
Material contracts | | | | | | | |
| | | | | | | | | |
| 10.1* | | 10-Q | | 10.1 | | 9/28/07 | | |
| | | | | | | | | |
| 10.2 | | 10-Q | | 10.1 | | 10/3/14 | | |
| | | | | | | | | |
| 10.3* | |
10-Q | | 10.1 | | 6/27/08 | | |
| | | | | | | | | |
| 10.4* | | 10-Q | | 10.2 | | 6/27/08 | | |
| | | | | | | | | |
| 10.5* | | 10-Q | | 10.1 | | 4/2/09 | | |
| | | | | | | | | |
| 10.6 | | 10-Q | | 10.2 | | 7/12/02 | | |
| | | | | | | | | |
| 10.7* | | 10-K | | 10.23 | | 1/30/17 | | |
| | | | | | | | | |
| 10.8* | | 10-Q | | 10.2 | | 3/30/12 | | |
| | | | | | | | | |
| 10.9* | | 10-Q | | 10.2 | | 10/3/14 | | |
| | | | | | | | | |
| 10.10* | | 10-K | | 10.39 | | 1/30/17 | | |
| | | | | | | | | |
| 10.11* | | 10-Q | | 10.1 | | 7/1/15 | | |
| | | | | | | | | |
|
| | | | | | | | |
| INDEX TO EXHIBITS | | | | | | |
| | | Incorporated by Reference |
| Exhibit Number | Exhibit Description | Form | | Exhibit | | Filing Date | | Filed Herewith |
| | | | | | | | | |
| 4.10 | | Post
Amend-
ment to
Form F-6 | | 99-a | | 4/15/03 | | |
| | | | | | | | | |
| 4.11 | | S-3 | | 4.1 | | 7/2/09 | | |
| | | | | | | | | |
| 4.12 | | | | | | | | X |
| | | | | | | | | |
| 4.13 | | | | | | | | X |
| | | | | | | | | |
| 4.14 | | | | | | | | X |
| | | | | | | | | |
| 4.15 | | | | | | | | X |
Material contracts | | | | | | | |
| | | | | | | | | |
| 10.1* | | 10-Q | | 10.1 | | 9/28/07 | | |
| | | | | | | | | |
| 10.2 | | 10-Q | | 10.1 | | 10/3/14 | | |
| | | | | | | | | |
| 10.3* | |
10-Q | | 10.1 | | 6/27/08 | | |
| | | | | | | | | |
| 10.4* | | 10-Q | | 10.2 | | 6/27/08 | | |
| | | | | | | | | |
| 10.5 | | 10-Q | | 10.2 | | 7/12/02 | | |
| | | | | | | | | |
| 10.6* | | 10-K | | 10.23 | | 1/30/17 | | |
| | | | | | | | | |
| 10.7* | | 10-Q | | 10.2 | | 10/3/14 | | |
| | | | | | | | | |
|
| | | | | | | | |
| INDEX TO EXHIBITS | | | | | | |
| | | Incorporated by Reference |
| Exhibit Number | Exhibit Description | Form | | Exhibit | | Filing Date | | Filed Herewith |
10.12*10.8* | | 10-K | | 10.39 | | 1/30/17 | | |
| | | | | | | | |
| 10.9* | | 10-Q | | 10.1 | | 7/1/15 | | |
| | | | | | | | |
| 10.10* | | 10-Q | | 10.2 | | 7/1/15 | | |
| | | | | | | | | |
10.13*10.11* | | 10-Q | | 10.3 | | 7/1/15 | | |
| | | | | | | | | |
10.14*10.12* | Amendment to Facilities Agreement dated May 18, 2016 among Carnival Corporation, Carnival plc and certain of Carnival Corporation and CarnivalplcCarnival plc subsidiaries, Bank of America Merrill Lynch International Limited, as facilities agent, and KfW IPEX-Bank GmbH, Bayerische Landesbank, New York Branch and DZ BANK AG, Deutsche Zentral Genossenschaftsbank, Frankfurt am Main, New York Branch, as new lenders. | 10-Q | | 10.1 | | 7/1/16 | | |
| | | | | | | | | |
10.15*10.13* | | 10-Q | | 10.3 | | 7/1/16 | | |
| | | | | | | | | |
10.16*10.14* | | 10-Q | | 10.4 | | 7/1/16 | | |
| | | | | | | | | |
10.17*10.15* | | 8-K | | 99.1 | | 10/21/16 | | |
| | | | | | | | | |
10.18*10.16* | | 10-Q | | 10.1 | | 3/30/17 | | |
| | | | | | | | | |
10.19*10.17* | | 10-Q | | 10.2 | | 3/30/17 | | |
| | | | | | | | | |
10.20*10.18* | | 10-Q | | 10.3 | | 3/30/17 | | |
| | | | | | | | | |
10.21*10.19* | | 8-K | | 10.1 | | 4/27/17 | | |
| | | | | | | | | |
10.22*10.20* | | 10-Q | | 10.2 | | 6/30/17 | | |
| | | | | | | | |
10.23* | | 10-Q | | 10.3 | | 6/30/17 | | |
| | | | | | | | |
10.24* | | 10-Q | | 10.4 | | 6/30/17 | | |
| | | | | | | | | |
|
| | | | | | | | |
| INDEX TO EXHIBITS | | | | | | |
| | | Incorporated by Reference |
| Exhibit Number | Exhibit Description | Form | | Exhibit | | Filing Date | | Filed Herewith |
Statements regarding computations10.21* | | 10-Q | | 10.3 | | | 6/30/17 | | |
| | | | | | | | | |
1210.22* | | 10-Q | | 10.4 | | | | | X |
| | | | | | | |
Annual report to security holders | | | | | 6/30/17 | | |
| | | | | | | | | |
1310.23* | | 10-Q | | 10.1 | | | | | X |
| | | | | | | | |
Subsidiaries of the registrants | | | | | 3/22/18 | | |
| | | | | | | | | |
2110.24* | | 10-Q | | 10.2 | | | | | X |
| | | | | | | |
Consents of experts and counsel | | | | | 3/22/18 | | |
| | | | | | | | | |
2310.25* | | 10-Q | | 10.3 | | 3/22/18 | | | | | | | X |
| | | | | | | | | |
Power10.26* | | 10-Q | | 10.4 | | 3/22/18 | | |
| | | | | | | |
24 | | | | | | X |
| | | | | | |
Rule 13a-14(a)/15d-14(a) certifications10.27* | | 10-Q | | 10.1 | | 6/25/18 | | |
| | | | | | | |
31.1 | | | | | | X |
| | | | | |
31.210.28* | | 10-Q | | 10.2 | | | X |
| | | | | | |
31.3 | | | | | | X |
| | | | | | |
31.4 | | | | | | X |
| | | 6/25/18 | | |
| | | | | | |
| | | |
| 10.29* | | 10-Q | | 10.1 | | 4/9/19 | | |
| | | | | | | | | |
| 10.30* | | 10-Q | | 10.2 | | 4/9/19 | | |
| | | | | | | | |
| 10.31* | | 10-Q | | 10.3 | | 4/9/19 | | |
| | | | | | | | |
| 10.32* | | 10-Q | | 10.4 | | 4/9/19 | | |
| | | | | | | | |
| 10.33* | | 10-Q | | 10.5 | | 4/9/19 | | |
| | | | | | | | |
| 10.34* | | 10-Q | | 10.1 | | 6/24/19 | | |
| | | | | | | | |
|
| | | | | | | | |
| INDEX TO EXHIBITS | | | | | | |
| | | Incorporated by Reference |
| Exhibit Number | Exhibit Description | Form | | Exhibit | | Filing Date | | Filed Herewith |
| 10.35* | | 10-Q | | 10.2 | | 6/24/19 | | |
| | | | | | | | |
| 10.36* | | 10-Q | | 10.3 | | 6/24/19 | | |
| | | | | | | | |
| 10.37* | | 10-Q | | 10.1 | | 9/26/19 | | |
| Annual report to security holders | | | | | | | |
| | | | | | | | |
| 13 | | | | | | | | X |
| | | | | | | | |
| Subsidiaries of the registrants | | | | | | | |
| | | | | | | | |
| 21 | | | | | | | | X |
| | | | | | | |
| Consents of experts and counsel | | | | | | | |
| | | | | | | | |
| 23 | | | | | | | | X |
| | | | | | | | |
| Power of attorney | | | | | |
| | | | | | |
| 24 | | | | | | X |
| | | | | | |
| Rule 13a-14(a)/15d-14(a) certifications | | | | | |
| | | | | | |
| 31.1 | | | | | | X |
| | | | | |
| 31.2 | | | | | | X |
| | | | | | |
| 31.3 | | | | | | X |
| | | | | | |
|
| | | | | | | | |
| INDEX TO EXHIBITS | | | | | | |
| | Incorporated by Reference |
| Exhibit Number | Exhibit Description | Form | | Exhibit | | Filing Date | | Filed Herewith |
| 31.4 | | | | | | X |
| | | | | |
| Section 1350 certifications | | | | | |
| | | | | | | |
| 32.1** | | | | | | X |
| | | | | | | |
| 32.2** | | | | | | X |
| | | | | | | |
| 32.3** | | | | | | X |
| | | | | | | |
| 32.4** | | | | | | X |
| | | | | | |
| Interactive data file | | | | | |
| 101 | The consolidated financial statements from Carnival Corporation & plc’s Form 10-K for the year ended November 30, 2017,2019, as filed with the SEC on January 29, 201828, 2019 formatted in Inline XBRL, are as follows: | | | | | |
| | (i) the Consolidated Statements of Income for the years ended November 30, 2017, 20162019, 2018 and 2015;2017; | | | | | X |
| | (ii) the Consolidated Statements of Comprehensive Income for the years ended November 30, 2017, 20162019, 2018 and 2015;2017; | | | | | X |
| | (iii) the Consolidated Balance Sheets at November 30, 20172019 and 2016;2018; | | | | | X |
| | (iv) the Consolidated Statements of Cash Flows for the years ended November 30, 2017, 20162019, 2018 and 2015;2017; | | | | | X |
| | (v) the Consolidated Statements of Shareholders’ Equity for the years ended November 30, 2017, 20162019, 2018 and 20152017 and | | | | | X |
| | (vi) the notes to the consolidated financial statements, tagged in summary and detail. | | | | | X |
| | | | | | | | |
| 104 | The cover page from Carnival Corporation & plc’s Form 10-K for the year ended November 30, 2019, as filed with the Securities and Exchange Commission on January 28, 2019, formatted in Inline XBRL (included as Exhibit 101) | | | | | |
*Indicates a management contract or compensation plan or arrangement.
**These items are furnished and not filed.
***Certain portions of this exhibit have been omitted pursuant to Item 601(b)(10) of Regulation S-K
Item 16. Form 10-K Summary.
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, each of the registrants has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
| |
| CARNIVAL CORPORATION | CARNIVAL PLC |
| /s/ Arnold W. Donald | /s/ Arnold W. Donald |
| President and Chief Executive Officer and | President and Chief Executive Officer and |
| Director | Director |
January 29, 201828, 2020 | January 29, 201828, 2020 |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of each of the registrants and in the capacities and on the dates indicated.
|
| |
| CARNIVAL CORPORATION | CARNIVAL PLC |
| /s/ Arnold W. Donald | /s/ Arnold W. Donald |
| President and Chief Executive Officer and | President and Chief Executive Officer and |
| Director | Director |
January 29, 201828, 2020 | January 29, 201828, 2020 |
| | |
| /s/ David Bernstein | /s/ David Bernstein |
| David Bernstein | David Bernstein |
| Chief Financial Officer and Chief Accounting Officer | Chief Financial Officer and Chief Accounting Officer |
January 29, 201828, 2020 | January 29, 201828, 2020 |
| | |
| /s/*Micky Arison | /s/*Micky Arison |
| Micky Arison | Micky Arison |
| Chairman of the Board of | Chairman of the Board of |
| Directors | Directors |
January 29, 201828, 2020 | January 29, 201828, 2020 |
| | |
| /s/*Sir Jonathon Band | /s/*Sir Jonathon Band |
| Sir Jonathon Band | Sir Jonathon Band |
| Director | Director |
January 29, 201828, 2020 | January 29, 201828, 2020 |
| | |
| /s/*Jason Glen Cahilly | /s/*Jason Glen Cahilly |
| Jason Glen Cahilly | Jason Glen Cahilly |
| Director | Director |
January 29, 201828, 2020 | January 29, 201828, 2020 |
| | |
| /s/*Helen Deeble | /s/*Helen Deeble |
| Helen Deeble | Helen Deeble |
| Director | Director |
January 29, 201828, 2020 | January 29, 201828, 2020 |
| | |
| | |
| | |
| | |
|
| |
| /s/*Richard J. Glasier | /s/*Richard J. Glasier |
| Richard J. Glasier | Richard J. Glasier |
| Director | Director |
January 29, 201828, 2020 | January 29, 201828, 2020 |
| | |
/s/*Debra Kelly-EnnisKatie Lahey | /s/*Debra Kelly-EnnisKatie Lahey |
Debra Kelly-EnnisKatie Lahey | Debra Kelly-EnnisKatie Lahey |
| Director | Director |
January 29, 201828, 2020 | January 29, 201828, 2020 |
| | |
| /s/*Sir John Parker | /s/*Sir John Parker |
| Sir John Parker | Sir John Parker |
| Director | Director |
January 29, 201828, 2020 | January 29, 201828, 2020 |
| | |
| /s/*Stuart Subotnick | /s/*Stuart Subotnick |
| Stuart Subotnick | Stuart Subotnick |
| Director | Director |
January 29, 201828, 2020 | January 29, 201828, 2020 |
| | |
| /s/*Laura Weil | /s/*Laura Weil |
| Laura Weil | Laura Weil |
| Director | Director |
January 29, 201828, 2020 | January 29, 201828, 2020 |
| | |
| /s/*Randall J. Weisenburger | /s/*Randall J. Weisenburger |
| Randall J. Weisenburger | Randall J. Weisenburger |
| Director | Director |
January 29, 201828, 2020 | January 29, 201828, 2020 |
| | |
| *By: /s/ Arnaldo Perez | *By: /s/ Arnaldo Perez |
| Arnaldo Perez | Arnaldo Perez |
| (Attorney-in-fact) | (Attorney-in-fact) |
January 29, 201828, 2020 | January 29, 201828, 2020 |
