UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended November 30, 2006 2009
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ______________ to ________________
Commission file number: 1-9610 Commission file number: 1-15136
Carnival Corporation Carnival plc
---------------------------- ----------------------------
(Exact name of registrant as (Exact name of registrant as
specified in its charter) specified in its charter)
Republic of Panama England and Wales
------------------------------ -------------------------------
(State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization)
59-1562976 98-0357772
----------------- ------------------
(I.R.S. Employer (I.R.S. Employer
Identification No.) Identification No.)
3655 N.W. 87th Avenue Carnival House, 5 Gainsford Street,
Miami, Florida 33178-2428 London SE1 2NE, United Kingdom
------------------------- ------------------------------
(Address of principal (Address of principal
executive offices) executive offices)
(Zip code) (Zip code)
(305) 599-2600 011 44 20 7940 5381
------------------------------ -------------------------------
(Registrant's telephone number, (Registrant's telephone number,
including area code) including area code)
Securities registered pursuant Securities registered pursuant
to Section 12(b) of the Act: to Section 12(b) of the Act:
Title of each class Title of each class
------------------- -------------------
Common Stock Ordinary Shares each represented
($.01 par value) by American Depositary Shares
($1.66 par value), Special
Voting Share, GBP 1.00 par value
and Trust Shares of beneficial interest
in the P&O Princess Special Voting Trust
Name of each exchange on which Name of each exchange on which
registered registered
------------------------------ ------------------------------
New York Stock Exchange, Inc. New York Stock Exchange, Inc.
Commission file number: 1-9610 | Commission file number: 1-15136 | |||
Carnival Corporation | Carnival plc | |||
(Exact name of registrant as | (Exact name of registrant as | |||
specified in its charter) | specified in its charter) | |||
Republic of Panama | England and Wales | |||
(State or other jurisdiction of | (State or other jurisdiction of | |||
incorporation or organization) | incorporation or organization) | |||
59-1562976 | 98-0357772 | |||
(I.R.S. Employer | (I.R.S. Employer | |||
Identification No.) | Identification No.) | |||
3655 N.W. 87th Avenue | Carnival House, 5 Gainsford Street, | |||
Miami, Florida 33178-2428 | London SE1 2NE, United Kingdom | |||
(Address of principal | (Address of principal | |||
executive offices) | executive offices) | |||
(Zip code) | (Zip code) | |||
(305) 599-2600 | 011 44 20 7940 5381 | |||
(Registrant’s telephone number, | (Registrant’s telephone number, | |||
including area code) | including area code) | |||
Securities registered pursuant | Securities registered pursuant | |||
to Section 12(b) of the Act: | to Section 12(b) of the Act: | |||
Title of each class | Title of each class | |||
Common Stock | Ordinary Shares each represented | |||
($.01 par value) | by American Depositary Shares | |||
($1.66 par value), Special Voting | ||||
Share, GBP 1.00 par value and Trust | ||||
Shares of beneficial interest in the | ||||
P&O Princess Special Voting Trust | ||||
Name of each exchange on which registered New York Stock Exchange, Inc. | Name of each exchange on which registered New York Stock Exchange, Inc. |
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrants are well-known seasoned issuers, as defined in Rule 405 of the Securities Act. Yes [x]þ No [ ]
¨
Indicate by check mark if the registrants are not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ]¨ No [x]
þ
Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes [x]þ No�� ¨
Indicate by check mark whether the registrants have submitted electronically and posted on their corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit and post such files). Yes þ No [ ]
¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants'registrants’ knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [x]
þ
Indicate by check mark whether the registrants are large accelerated filers, accelerated filers, non-accelerated filers, or non-accelerated filers.small reporting companies. See definitionthe definitions of "accelerated“large accelerated filer,” “accelerated filer” and large accelerated filer"“smaller reporting company” in
Rule 12b-2 of the Act). Large
Accelerated Filers [x] Accelerated Filers [ ] Non-Accelerated Filers [ ]
Exchange Act.
Large Accelerated Filers | þ | Accelerated Filers | ¨ | |||
Non-Accelerated Filers | ¨ | Smaller Reporting Companies | ¨ |
Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Act). Yes [ ]¨ No [x]
The aggregate market value of the The aggregate market value of the
voting and non-voting common equity voting and non-voting common equity
held by non-affiliates computed by held by non-affiliates computed by
reference to the price at which the reference to the price at which the
common equity was last sold was $15.98 common equity was last sold was $6.94
billion as of the last business day of billion as of the last business day of
the registrant's most recently the registrant's most recently
completed second fiscal quarter. completed second fiscal quarter.
At February 5, 2007, Carnival At February 5, 2007, Carnival plc had
Corporation had outstanding 623,106,732 outstanding 213,115,941 Ordinary
shares of its Common Stock, $.01 par Shares $1.66 par value, one Special
value. Voting Share, GBP 1.00 par value and
623,106,732 Trust Shares of beneficial
interest in the P&O Princess Special
Voting Trust.
The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold was $10.2 billion as of the last business day of the registrant’s most recently completed second fiscal quarter. | The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold was $4.2 billion as of the last business day of the registrant’s most recently completed second fiscal quarter. | |
At January 21, 2010, Carnival Corporation had outstanding 620,036,762 shares of its Common Stock, $0.01 par value. | At January 21, 2010, Carnival plc had outstanding 213,447,757 Ordinary Shares $1.66 par value, one Special Voting Share, GBP 1.00 par value and 620,036,762 Trust Shares of beneficial interest in the P&O Princess Special Voting Trust. |
DOCUMENTS INCORPORATED BY REFERENCE
The information described below and contained in the Registrants' 2006Registrants’ 2009 annual report to shareholders to be furnished to the U.S. Securities and Exchange Commission pursuant to Rule 14a-3(b) of the Securities Exchange Act of 1934 is shown in Exhibit 13 and is incorporated by reference into this joint Annual Report on Form 10-K.
10-K (“Form 10-K”).
Part and Item of the Form 10-K
Part II
Item 5(a) and (c). Market for Registrants' Common Equity, Related Stockholder
Matters, Securities Authorized for Issuance under Equity
Compensation Plans and Issuer Purchases of Equity
Securities - Market Information and Holders.
Item 6. Selected Financial Data.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Item 8. Financial Statements and Supplementary Data.
Item 5(a). | Market for Registrants’ Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities—Market Information, Holders and Performance Graph. | |
Item 6. | Selected Financial Data. | |
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. | |
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk. | |
Item 8. | Financial Statements and Supplementary Data. |
Portions of the Registrants' 2007Registrants’ 2010 joint definitive proxy statement, to be filed with the U.S. Securities and Exchange Commission, are incorporated by reference into this joint Annual Report
on Form 10-K under the items described below.
Part and Item of the Form 10-K
Part III
Item 10. Directors and Executive Officers of the Registrants.
Item 11. Executive Compensation.
Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters.
Item 13. Certain Relationships and Related Transactions.
Item 14. Principal Accounting Fees and Services.
Item 10. | Directors, Executive Officers and Corporate Governance. | |
Item 11. | Executive Compensation. | |
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. | |
Item 13. | Certain Relationships and Related Transactions, and Director Independence. | |
Item 14. | Principal Accounting Fees and Services. |
2
PART I
Item 1. Business.
A. General
Item 1. | Business. |
A. | General |
Carnival Corporation is incorporated in Panama, and Carnival plc is incorporated in England and Wales. Carnival Corporation and Carnival plc operate as a dual listed company ("DLC"(“DLC”), whereby the businesses of Carnival Corporation and Carnival plc are combined through a number of contracts and through provisions in Carnival Corporation's articlesCorporation’s Articles of incorporationIncorporation and by-lawsBy-Laws and Carnival plc's memorandumplc’s Articles of association and articles of association. Association.
Carnival Corporation and Carnival plc are both public companies, with separate stock exchange listings and their own shareholders. Although theThe two companies have
retained their separate legal identities; they operate as if they wereare a single economic enterprise, with a single executive management team and have identical Boards of Directors.Directors, but each has retained its separate legal identity. See Note 3, "DLC Structure"“DLC Structure” to our Consolidated Financial Statements in Exhibit 13 to this joint Annual Report on Form 10-K. Together with their consolidated subsidiaries Carnival Corporation and Carnival plc are referred to collectively in this joint Annual Report on Form 10-K as "Carnival“Carnival Corporation & plc," "our," "us,"” “our,” “us,” and "we."
“we.”
We are the largest cruise company and one of the largest vacation companies in the world. We have a portfolio of widely recognized cruise brands and are a leading provider of cruises to all major vacation destinations. See Part I, Item 1. BusinessBusiness. B. - "Cruise Operations"“Cruise Operations” for furtheradditional information.
As of February 12, 2007, aJanuary 28, 2010, the summary by brand of our passenger capacity, the number of cruise ships we operate, by brand, their passenger capacity and the primary areas in which they are marketed is as follows:
Cruise Brands | Passenger Capacity (a) | Number of Cruise Ships | Primary Market | |||
Carnival Cruise Lines | 54,480 | 22 | North America | |||
Princess Cruises (“Princess”) | 37,588 | 17 | North America | |||
Costa Cruises (“Costa”) (b) | 28,426 | 14 | Europe | |||
Holland America Line | 21,378 | 14 | North America | |||
P&O Cruises (c) | 11,998 | 6 | United Kingdom (“UK”) | |||
AIDA Cruises (“AIDA”) | 9,862 | 6 | Germany | |||
Ibero Cruises (“Ibero”) | 5,010 | 4 | Spain and Brazil | |||
P&O Cruises Australia | 4,744 | 3 | Australia and New Zealand | |||
Cunard Line (“Cunard”) | 4,608 | 2 | UK and North America | |||
Ocean Village (d) | 1,578 | 1 | UK | |||
The Yachts of Seabourn (“Seabourn”) | 1,074 | 4 | North America | |||
180,746 | 93 | |||||
(a) | In accordance with cruise industry practice, passenger capacity is calculated based on two passengers per cabin even though some cabins can accommodate three or more passengers. |
(b) | Includes the 1,488-passenger capacityCosta |
(c) | Includes the 1,200-passenger capacityArtemis, which was sold in October 2009 to an unrelated entity and is being operated by P&O Cruises |
(d) | The Ocean Village brand is being phased-out with the planned transfer of its ship to P&O Cruises Australia |
As of February 12, 2007,January 28, 2010, we had signed agreements with three shipyards providing for the construction of 2013 additional cruise ships scheduled to enter service between March 2007February 2010 and June 2011.2012. These additions, net of the two withdrawals mentioned above, are expected to result in an increase in our passenger capacity of 49,30827,754 lower berths, or 34.3%,berths. The impact of these net additions is a 15.3% increase in passenger capacity as compared to February 12, 2007.our January 28, 2010 passenger capacity. It is possible that some of our other older ships may also be sold, chartered or retired during the next few years, thus reducing the size of our fleet over this period. Alternatively, it is also possible that we could order
more ships, which could enter service in 2010 and 2011, or acquire more ships, thus increasing the size of our fleet over this period. See Part I, Item 1. Business. B. “Cruise Operations – Ship Information” and Note 6, "Commitments"“Commitments” to our Consolidated Financial Statements in Exhibit 13 to this joint Annual Report on Form 10-K for additional information regarding our ship commitments.
3
In addition to our cruise operations, we own Holland America Tours and
Princess Alaska Tours, the leading cruise/tour operatorsoperator in the Statestate of Alaska and the Canadian Yukon Territory of Canada, which primarily complement their respectivecomplements our Alaska cruise operationsoperations. This tour operator currently owns and own substantially all the assets noted below. These tour companies currently
market and operate:
- - 16operates, among other things, 15 hotels or lodges, with 3,400 guest rooms, 390 motorcoaches and 20 domed rail cars.
Mission, Primary Financial Goal and Related Strategies
Our mission is to deliver exceptional vacation experiences through some of the world’s best-known cruise brands that cater to a variety of different geographic regions and lifestyles, all at an outstanding value unrivalled on land or at sea. Our primary financial goal is to profitably grow our cruise business, while maintaining a strong balance sheet, which enhances our financial flexibility. Our ability to generate significant operating cash flows has allowed us to internally fund the majority of our capital investment program.
To achieve our goals we build new and innovative ships and continue to invest in Alaskaour existing ships to strengthen the leadership position of each of our brands. Our newbuilding program is the primary platform for growth for our brands that are operating in established cruise markets. We currently have 13 cruise ships scheduled to enter service between February 2010 and June 2012, six of which will enter service in 2010. Our current intention is to have an average of two to three new cruise ships enter service annually in 2012 and beyond. Based on our current ship orders, our growth rate in North America, which is the most developed cruise region, is 3%, compounded annually through 2012. However, the majority of our growth over the next three years will come from our European brands, which are in an earlier stage of market development, and are expected to grow by 9%, compounded annually through 2012. As previously announced, we also intend to grow our presence in emerging growth markets, such as Australia and New Zealand, Asia and South America, by redeploying some of our existing ships to these markets in order to develop an increasing awareness and appetite for cruising.
Our operating structure is decentralized, with each of our major brands having its own headquarters and operating team, which we believe helps create an ownership culture that is an important driver of our performance. We believe this decentralized approach results in delivering a product that is specifically tailored to identifiable geographic regions and lifestyles, which allows us to more effectively penetrate each market. Although we operate under this decentralized structure, we leverage our size to obtain economies of scale and synergies, which reduces costs by consolidating our purchasing power and implementing common cost-containment initiatives, such as common reservation systems, coordinated media buying, tour business integration, cross-selling, shared data centers and shared port facilities.
We believe the successful execution of these and other ongoing strategies has enabled us to become one of the most profitable companies in the vacation industry, while maintaining the industry’s highest credit rating.
Health, Environment, Safety and Security Policy
We are committed to:
Protecting the health, safety and security of our guests, employees and all others working on our behalf, thereby promoting an organization that is free of injuries, ill health and loss.
Protecting the environment, including the marine environment in which our vessels sail and the Canadian Yukon,communities in which we operate, minimizing adverse environmental consequences and using resources efficiently.
Fully complying with over 3,500 guest
rooms;
3
- - over 560 motorcoaches used for sightseeingor exceeding all legal and charters in Washington State,
Alaska, British Columbia, Canadastatutory requirements related to health, environment, safety and security throughout our business activities.
Assigning health, environment, safety and security matters the Canadian Yukon;
- - 29 domed rail cars, which are run on the Alaska Railroad between Anchorage
and Fairbanks, Whittier and Denali, and Whittier and Talkeetna;
- - two luxury dayboats offering tours to a glacier in Alaska and on the Yukon
River; and
- - sightseeing packages, or individual components of such packages, sold either
separately orsame priority as part of our cruise/tour packages to our Alaskan cruise
passengers and to other vacationers.
B. Cruise Operations
I. Industry Background
critical business matters.
B. | Cruise Operations |
I. | Industry Background |
The multi-night cruise industry has grown significantly in recent years,over the past decade, but still remains a relatively small part of the wider global vacation market in which cruise companies compete for the discretionary income spent by vacationers. WeAccording to G.P. Wild (International) Limited (“G.P. Wild”), an independent cruise research company, the global cruise industry carried 16.2 million passengers in 2008 and we estimate, based on internally developed global capacity growth rates, that the global cruise industry carried approximately 15.717.2 million passengers in 2006.2009. The principal regions from which cruise passengers are sourced from are North America, which has increased by an estimated compound annual growth rate of 7.8%4.6% between 20002003 and 2005,2008, and Western Europe where cruise passengers have increased by a compound annual growth rate of approximately 10.0% between 2000 and 2005.10.2%. In Europe, cruising represents a smaller proportion of the overall vacation market than it does in North America and, accordingly, we believe the European market has considerablesignificant growth potential. We also believe that the North American market continues to have growth potential. Other areas such as Asia, the South Pacific, including Australia and New Zealand, Asia and South America are currently a source of much lower numbers offewer cruise passengers, and we believe these regions also believe have significant growth potential. For a discussion of the favorable characteristics of the cruise industry, which we believe enables it to have these favorable growth prospects, see Part I, Item 1. Business. B. “Cruise Operations - Characteristics of the Cruise Vacation Industry.” During 2009, 2008 and 2007, 48%, 45% and 40% of our revenues were generated from passengers sourced outside North America, respectively, as we continue to expand our global presence. See Note 11, "Segment Information"“Segment Information” to our Consolidated Financial Statements in Exhibit 13 to this joint Annual Report on Form 10-K for financial information regarding our cruise revenues.
segment.
4
Cruising offers a broad range of products to suit vacationing customersguests of many ages, backgrounds and interests. Cruise brands can be broadly characterizedclassified as offering contemporary, premium and luxury cruise experiences. The contemporary experience typically includes cruises on larger ships that last seven days or less, have a more casual ambiance and are less expensive than premium or luxury cruises. The premium experience typically includes cruises on more intermediate-sized ships that last from seven to 14 days.days and appeal to the more experienced cruise guest who is usually more affluent and older. Premium cruises emphasize quality, comfort, style, and more destination-focused itineraries and the average pricing on these cruises is typicallynormally higher than contemporary cruises. The luxury experience is typicallyusually characterized by smallersmall vessel size, very high standards of accommodation and service, and higher prices than premium cruises.and exotic itineraries to ports which are inaccessible to larger ships. Notwithstanding these broad classifications, there generally is significant overlap and competition among all cruise products.
We are a leading provider of cruise vacations in most ofall the largest vacation markets in the world, includingwhich are comprised of North America, the UK, Germany, Southern Europe, Australia and New Zealand, Asia and South America and Asia/Pacific, with significantAmerica. We have product offerings in each of the three classifications noted above. Our mission is "to deliver exceptional
vacation experiences through the world's best-known cruise brands that cater to
a variety of different lifestyles and budgets, all at an outstanding value
unrivalled on land or at sea." A brief description of the principal vacation areas where we source substantially all of our passengersguests and our brands that market primarily to these vacationers is as follows:
II. North America
Mostdiscussed below.
II. | North America |
Approximately 63% of the cruise passengers in the world are sourced from North America, where cruising has developed into a mainstream alternative to land-based resort and
sightseeing vacations. Approximately 10.010.3 million North American-sourced cruise passengers took cruise vacations for two or more consecutive nights or more in 2005,2008, and we estimate this amount increased to about 10.8that approximately 10.4 million passengers cruised in 2006.2009. This sectormarket has continuedgrown significantly in prior years and we expect that it will continue to grow in recent yearsthe future as new capacity is introduced.
The weighted-average aggregate passenger capacity that has been introduced.
or is expected to be marketed by the total cruise industry and us in North America is as follows(a):
Total Cruise Industry | Carnival Corporation & plc | |||
Year | ||||
2009 | 209,000 | 106,000 | ||
2010 | 218,000 | 109,000 | ||
2011 | 232,000 | 113,000 | ||
2012 | 241,000 | 116,000 |
(a) | Our estimates of capacity do not include assumptions related to unannounced ship withdrawals due to factors such as the age of ships or changes in the location from where ships’ guests are predominantly sourced and, accordingly, our estimates could indicate a higher percentage growth in North American capacity than will actually occur. These figures also include some ships that were, or are expected to be, marketed in both North America and elsewhere during different times of the year. |
The principal itinerariesindustry’s and our net capacity serving North American-sourced cruise guests has increased at a compound annual growth rate of 2.5% and 4.8%, respectively, for the past three years. The industry’s and our compound annual net capacity growth rate is currently expected to be 4.7% and 3.1%, respectively, for the next three years, based on the assumptions discussed above.
5
The locations visited by North American-sourced cruise passengersguests in 2006 were2009 included the Caribbean (including the Bahamas, Mexico and Alaska. In
addition, North American cruise passengers visited Europe,Bahamas), Mexican Riviera, the Mediterranean, Alaska, Northern Europe, New England and Canada, Bermuda, Hawaii, the Panama Canal and other exotic locations, includingsuch as South and Central America, Africa, the South Pacific islands, Australia, the Far East and India.
4
At the end of 2006, 127 ships with an aggregate passenger capacity of
approximately 202,000 lower berths were based primarily in North America. Based
on the number of ships that are currently on order worldwide and scheduled for
delivery between 2007 and 2010, we expect that the net capacity serving North
America will continue to increase. Our projections indicate that by the end of
2007, 2008, 2009 and 2010, North America will be served by 129, 135, 140 and 142
ships, respectively, having an aggregate passenger capacity of approximately
210,000, 225,000, 240,000 and 246,000 lower berths, respectively. These figures
include some ships that were, or are expected to be, marketed in both North
America and elsewhere during different times of the year. Our estimates of
capacity do not include assumptions related to unannounced ship withdrawals due
to factors such as the age of ships or changes in the location from where ships'
passengers are predominantly sourced and, accordingly, could indicate a higher
percentage growth in North American capacity than will actually occur.
Alternatively, our growth estimates for 2010 may increase because of future
shipbuilding orders, which have not yet been announced. Net capacity serving
North American-sourced cruise passengers has increased at a compound annual
growth rate of 5.3% for the past three years. The future growth rate is
currently expected to be 5.8% for the next three years before reductions for
withdrawals or transfers to other parts of the world.
Carnival Cruise Lines, Princess, Holland America Line Seabourn and WindstarSeabourn source their passengersguests primarily from North America. Costa and Cunard sources
mostalso source some of its passengerstheir guests from Europe and North America.
Carnival Cruise Lines, operates 21which began operations in 1972, is our largest brand and is a leader in offering fun, memorable vacations at an affordable price. This brand is widely recognized as the “Fun Ships,” with 22 contemporary ships with one additional
ship expectedoperating voyages generally from three to begin serviceeight days. These ships call year-round in each of fiscal 2007, 2008, 2009ports in the Caribbean (including the Bahamas) and 2011.the Mexican Riviera. In addition, they sail on seasonal cruises to Alaska, Bermuda, Canada/New England, Europe, Panama Canal, South America and the Hawaiian Islands. Carnival Cruise Lines will operate from 19 North American homeports in 2010; the most of any cruise brand. In September 2009, Carnival Cruise Lines took delivery of its largest cruise ship, the 3,642-passengerCarnival Dream. Offering a host of innovations including, among others, the largest WaterWorks aqua park at sea, a two-level Serenity adults-only retreat, an entertainment venue called Ocean Plaza and an indoor/outdoor cafe,Carnival Dreamis the largest cruisefirst in a new class ofDream ships. The line has two additional “Dream-class” ships contracted for delivery, one in 2011 and one in 2012. In addition, Carnival Cruise Lines continues to invest in its current fleet, including the world,$250 million Evolutions of FunSM product enhancement initiative for its eightFantasy Class vessels. In 2009,Carnival Sensation andCarnival Ecstasy were the latest ships to undergo these enhancements, which include upgrades to all guest accommodations, a new water park, resort-style pool and the addition of an adults-only deck area.
The brand strives to reconnect guests to the fun in life. A Carnival Cruise Lines vacation offers quality
cruise vacations at affordable prices and is well-known as the "Fun Ships,"
which we believe captures the essence of the brand. Carnival is continually
introducing ways to keep its cruise experience fresh and exciting, including
expandedaward-winning dining, choices, Carnival Comfort Bed sleep systems, spectacular production shows,entertainment, spacious staterooms, innovative childrens'children’s programming, revitalizing spa services and action-packed casinos. All ofIn 2009, Carnival Cruise Lines' ships were designed byLines launched the Your Choice DiningSM program, further enhancing the onboard dining experience with added flexibility and built for it,
including seven that are amongconvenience. Carnival Cruise Lines sets the world's largest. During all or a portion offun in motion and its “FUN FOR ALL. ALL FOR FUN.” brand promise captures the year, threeauthentic spontaneous fun of the Carnival Cruise Lines ships callexperience. This spirit, when combined with a culture that prides itself on ports oninnovation, positions the Mexican
Riviera,brand well to continue to grow and substantially all of the rest of the fleet operate for most of the
year to destinations in the Bahamas or the Caribbean. In addition, Carnival
Cruise Lines ships also offer seasonal cruises to Alaska, Canada/New England,
Europe, the Hawaiian Islands, the Panama Canal and Bermuda. Most cruises range
from three to seven days.
retain its standing as a cruise market leader.
Princess, whose brand name was made famous by the "Love Boat"Love Boat television show, recently celebrated its 40th anniversary, and ishas been providing cruises since 1965. Princess, the world'sworld’s third largest cruise line, withoperates a fleet of 1517 modern ships. Princess offers over 90125 unique itineraries to more than 270330 destinations, with cruises generally from seven to 14 days, and two world cruises in 2010 of 104 and 107 days. Princess is a leading cruise line in international and exotic regions all over the world, (Europe,including Alaska, Africa, Asia, Australia, theEurope, South Pacific islands, Australia, and South America). As partAmerica. Some of some of Princess'Princess’ Caribbean cruise offerings feature a private island destination that Princess leases and operates, a private island destination, known as Princess Cays which is located on the island of EleuthraEleuthera in the Bahamas. Substantially
all of Princess' ships reflect an innovative design philosophy called "Big Ship
Choice, Small Ship Feel," emphasizing a broad variety of amenities combined with
the more intimate ambience found on smaller vessels. All Princess ships feature
the Personal Choice Dining program, offering guests flexibility, convenience and
quality in an array of traditional, anytime, specialty and casual dining
options. A quality service program entitled C.R.U.I.S.E. (Courtesy, Respect,
Unfailing In Service Excellence) helps ensure extremely high standards of
service throughout the fleet.
Princess is widely recognized among travel agents as an innovative, premium cruise line. line committed to helping its guests Escape Completely® from their daily routine and responsibilities. Princess ships have a warm, welcoming “comfortable elegance,” providing a relaxed, rejuvenating retreat from which to explore the world, befitting its mission to be The Consummate Host® to its guests.
6
The introduction ofRuby Princessin 2008 represented the Caribbean Princess and Crown
Princess are the latestninth ship in the evolving Grand Class series of vessels, with
their "Moviesfeaturing signatures such as “Movies Under the Stars"Stars” outdoor theaters showing first-run Hollywood hits on a 300330 square foot outdoor poolside LED screen. Furtherscreen, the adults-only sanctuary retreat deck and the Piazza atrium experience. While these innovations were launched on Grand Class Ships
that will be introduced include the Emeraldvessels, Princess in 2007 and an additional
ship in 2008. More than 57%is now introducing these amenities throughout its fleet. At least 56% of each of these Grand Class ship'sship’s staterooms will
have balconies;balconies, another hallmarkcharacteristic of Princess'Princess’ ships. Princess attracts consumers
with a compelling, highly integrated brand marketing campaign, utilizing the
slogan "Escape Completely" which appears in magazines, newspapers, direct mail,
online, DVD and point-of-sale materials.
Holland America Line, with 136 years of cruising experience, operates a premium fleet of 1314 ships, with anone additional ship, expected to begin serviceNieuw Amsterdamcontracted for delivery in 2008.2010. Holland America Line will
offer nearly 500 sailings to all major cruising areascruises call at more than 320 destinations in more than 100 countries and territories on all seven continents. Major homeports include New York, Boston,
5
Ft. Lauderdale, Tampa, San Diego, Seattle, Vancouver, Copenhagen, Amsterdam,
Rotterdam, Rome, Rio de Janeiro, Valparaiso, Auckland, Sydney and Hong Kong.The majority of Holland America's ships, which tendAmerica Line’s cruises are from seven to be smaller21 days. However there are several longer and more exotic cruises, such as the world cruise which lasts 114 days. Most sailings in the Caribbean visit Holland America Line’s private island in the Bahamas, Half Moon Cay. Holland America’s fleet of mid-sized ships is designed for more intimate were
designed withcruising. The spacious, classically-designed ships feature airy viewing lounges, wraparound teak decks and private, roomy verandahs that offer guests the chance to experience wildlife and scenery.
Cruise lengths vary from two to 114 days with most being seven days or longer.
The majority of Holland America Line's sailings in the Caribbean visit a private
island destination known as Half Moon Cay, which is owned by Holland America
Line.
In 2006,
As Holland America Line completedintroduces new guests to its fleet-wide productpremium brand, the brand also continues to enjoy one of the highest rates of repeat cruisers in the cruise industry. Its onboard experience is distinguished by warm, personalized service, a classic and service
enhancement program. These comprehensive enhancements, known aselegant approach to interior design and one of the "Signaturemost extensive collections of Excellence," focus onart and antiques at sea. The five areas vital toidentified as pillars of the Holland America Line's guest experience as follows:are (1) spacious, elegant ships and accommodations, (2) sophisticated five-star dining, (3) gracious, unobtrusiveaward-winning service, (4) extensive enrichment programs and activities and (5) compelling worldwide itineraries.
Windstar operates three motor-sail yachts known for their casually elegant
atmosphere. In 2007, Windstar will offer sailings
The Signature of Excellence® product enhancement initiative announced over six years ago has evolved into an ongoing and comprehensive review of every aspect of the Holland America Line guests’ experience and represents a $525 million investment in the Caribbean, Europe,brand. Signature of Excellence® features and amenities include upgrades to all guest accommodations, such as new flat panel televisions and plush Euro-top “Dream Beds,” resort-style pools with giant LED screens overlooking them, state-of-the-art onboard show kitchens, more enticing destinations, enhanced dining experiences, such as the Americaspopular casual Canaletto Restaurant, more creative activities and the Greek Isles. Renowned for offeringeven higher levels of service.
Seabourn provides ultra-luxury cruising vacations in a luxury cruise experienceunique, small-yacht style that is "180 Degrees from Ordinary," a high-percentage of return guests attests
to the appeal of Windstar's casual ambiance of resort-style attire, exquisitefocuses on personalized services, all-suite accommodations, superb cuisine and an extensive wine selection,unique experiences. Consistently rated among the top vacation choices, Seabourn pampers its guests with complimentary open restaurant-style seating,
attentive service, exotic destinationsbars, open-seating restaurants and complimentaryvalue-added extras such as Massage MomentsSM on deck, Caviar in the SurfSM beach parties and water sports. A major
fleet wide enhancement program, known assports from the "Degrees of Difference," began in
fall 2006 and is expected to be completed in 2007.
The three Seabourn ships (the "Yachts of Seabourn") deliver personalized
service and superb cuisine aboard each of their 208 passenger capacity all-suite
ships. The Yachts of Seabourn offer an ultra-luxury experience and are
considered the ultimate in cruise travel. Theseyachts’ fold-down marina. Seabourn’s ships offer destinations throughout the world, including Europe, Asia, the South Pacific islands, Australia and the Americas, with cruises generally in thefrom seven to 14 days, with some of longer length, including a 108 day range. The Yachtsworld cruise. Seabourn currently operates three 208-guest yachts and one 450-guest yacht and will continue its fleet expansion with two additional 450-guest yachts, one in 2010 and one in 2011, Seabourn Sojourn andSeabourn Quest, respectively. These larger yachts offer more categories of luxury suites, more dining alternatives and an 11,400-square foot spa facility that is the largest on any ultra-luxury vessel. All the Seabourn itineraries include many smaller, off-the-beaten-track portsyachts have a service ratio of nearly one staff member per guest, and the intimate, sociable atmosphere that are
inaccessible to larger ships.has been the hallmark of the Seabourn recently ordered two new 450 passenger
capacity ships, which are expected to begin service inyachting lifestyle for over 21 years. During 2009 and 2010.
III. Europe
2010, the original three 208-guest yachts,Seabourn Pride,Seabourn Spirit andSeabourn Legend,are each scheduled for an interior refurbishment of public areas to more closely match the recently deliveredSeabourn Odyssey.
7
III. | Europe |
We believe that Europe is the largest single leisure travel vacation market in the world, but to date cruising in Europe has achieved a much lower level of market penetration rate than in North America, and isrepresents a relatively small percentage of the European vacation market. Approximately 3.24.4 million European-sourced passengers took cruise vacations for two or more consecutive nights in 20052008 compared to approximately 10.010.3 million North American-sourced passengers. Additionally, we estimate that about 3.54.9 million European-sourced passengers took a cruise in 2006.2009, which was approximately the same size as the North American market in 1997. The number of European cruise passengers increased by a compound annual growth rate of approximately 10.0%10.8% between 20002003 and 2005.2008. We believe that the European market represents a significant growth opportunity for us, and we plan to introduce a number of new or existing ships into Europe over the next several years. Approximately 55%,In addition to increasing our European revenues, these capacity increases should further benefit us by enabling us to achieve increasing economies of scale. Over 20,000 berths, or 26,886 berths,66%, of our shipspassenger capacity under construction havehas been designated for our European brands. At the endOur European brands represent 33% of 2006, 104 ships with anour total capacity at November 30, 2009, and we expect them to increase to 37% of our total capacity by 2012, assuming no new acquisitions, transfers or withdrawals are announced other than as previously discussed.
The weighted-average aggregate passenger capacity of
approximately 104,000 lower berths were based primarily in Europe. Our
projections indicate that by the end of 2007, 2008, 2009 and 2010, Europe will
be served by 108, 113, 117 and 120 ships, respectively, having an aggregate
passenger capacity of approximately 114,000, 126,000, 136,000 and 144,000 lower
berths, respectively. These figures include some ships that were,has been or areis expected to be marketed by the total cruise industry and us in both Europe is as follows(a):
Year | Total Cruise Industry | Carnival Corporation & plc | ||
2009 | 139,000 | 59,000 | ||
2010 | 154,000 | 65,000 | ||
2011 | 159,000 | 70,000 | ||
2012 | 164,000 | 75,000 |
(a) | Our estimates of European capacity are based on similar assumptions as discussed previously for our North American estimates. |
The industry’s and elsewhere during different times of
the year. Netour net capacity serving European-sourced cruise passengersguests has increased at a compound annual growth rate of 6.5%12.0% and 13.6%, respectively, for the past three years. The futureindustry’s and our compound annual net capacity growth rate is currently expected to be 9.5%5.8% and 8.9%, respectively, for the next three years. Our
estimates of European capacity are based on similar assumptions as discussed
previously for our North American estimates.
A. United Kingdom
The locations visited by European-sourced cruise guests in 2009 included the Mediterranean, the Caribbean, Bermuda, Northern Europe (including Scandinavia and the Baltic), the Atlantic Isles (including the Canary Islands and Madeira), the Arabian Gulf and Indian Ocean, New England and Canada and other exotic locations around the world.
a. | United Kingdom |
The UK is one of the single largest countryregions from which cruise passengers are sourced in Europe. Approximately 1.11.5 million UK passengers took cruises in 2005.2008, and we estimate that a similar number also took cruises in 2009. Cruising was relatively underdeveloped as a vacation option for the UK consumers
until the mid-1990s, but since then cruising in the UK has grown significantly.is an established alternative to land-based resort and sightseeing vacations. The number of UK cruise passengers increased by a compound annual growth rate of approximately 7.0%8.9% between 20002003 and 2005. The main destination2008. We believe that the UK has growth potential for UKthe cruise passengersindustry because the market penetration level is the Mediterranean. Other popular destinations for UK cruise
passengers include the Caribbean, the Atlantic Islands, including the Canary
Islands and the Azores, and Scandinavia.
6
P&O Cruises Ocean Village and Swan Hellenic sourcesources substantially all of their passengersits guests from the UK. In addition, ourCunard sources most of its guests from the UK, North America, Germany and Australia. Our North American brands and Costa also source passengerssome guests from the UK. For example, Princess Cruises' Sea Princess
whichOur UK Ocean Village brand is homeportedbeing phased-out with the transfer of its ships to P&O Cruises Australia. The first ship was transferred in Southampton during the summer months and Fort Lauderdale
during the winter season has been primarily marketed to UK vacationers since
2005. Cunard sources customers from the UK, North America, Germany, AustraliaNovember 2009 and the rest of the world.
second ship is planned to be transferred in November 2010.
8
P&O Cruises, with over 170 years of cruising experience, is the largest cruise operator and best known cruise brand in the UK, with fivesix premium ships, and one additional ship, expected to begin
serviceAzura, contracted for delivery in each of fiscal 20082010. Artemiswill leave the fleet in April 2011, as it was sold in October 2009 and 2010.is currently being chartered back. Artemis will be replaced byAdonia, which is currently sailing asRoyal Princess. She will be the smallest ship in the fleet with a 710-passenger capacity, and will take over the small ship, traditional, adult-only product offering. These ships cruise to over 200205 destinations in more than 9074 countries, with most cruises ranginggenerally from seven to 1416 days, but with some cruises lasting longer, including three world cruises in
each of 2007 and 2008. These ships, which are relatively new comparedranging from 84 to 104 days. P&O Cruises offers cruises from Southampton, England to the ships that are more typically marketed inMediterranean, the UK, haveAtlantic Isles, the Baltic, Scandinavia and the Norwegian Fjords for the majority of the year, and primarily operates Caribbean cruises and a choice of world cruises during the fall and winter.
The recent P&O Cruises fleet expansion has enabled P&O Cruises to offer a more modern style of cruising to its UK cruise passengersguests and increase theirbroaden its appeal, toreaching younger passengersguests with and without families, while retaining older and more traditional British customers. The guests. Artemis andArcadia are child-freeadult-only ships, which generally appeal to an older guest demographic, while the rest of the fleet is well-equippedwell-suited towards families.
P&O Cruises’ ships deliver a world of extraordinary experiences for children's activities. The ships have a wide choice
of dining and entertainment options andguests by ensuring that they offer a welcoming atmosphere, with an
emphasis onhigh quality distinctly British experience, which is described by regular guests as “like coming home” every time they return for a P&O Cruises holiday. The P&O Cruises ships are different from one another, which allows the attributes of "Britishness," "professionalism," British guest to tailor their holiday by selecting the ship that best reflects their holiday requirements. It also means that repeat customers can enjoy different P&O Cruises ship experiences each time they sail.
Venturaand "style."
Both Arcadia and Oceana offer a more contemporary and innovative experience with ana more informal atmosphere and range of alternative dining venues, from restaurants and buffets to grills and bistros and thebistros. The elegant superlinersArcadia, Aurora andOriana offer a stylish and classic cruise experience with their broad decks, traditional artwork and blend of formal and informal onboard experiences. The Artemis,the smallest ship in the P&O Cruises fleet, offers a more traditional and intimate experience, her size enabling her to visitcalling on ports not chartedvisited by larger vessels as well asand fostering a real sense of camaraderie of
particular appeal to those who enjoy a more formal onboard experience, including
P&O Cruises traditions such as afternoon teabetween her guests.
Cunard, which was launched in 1839 and her program of Music Festivals
at Sea. Each of these different ambiences appeal to a different type of British
passenger. P&O Cruises offers cruises from Southampton, England tohas the Mediterranean, the Atlantic Islands, the Baltic, Scandinavia and the Norwegian
Fjords during the summer, and primarilyMost Famous Ocean Liners In The WorldSM, operates Caribbean cruises and a choice
of three world voyages during the winter.
Under the Cunard brand, which is one of the most widely recognized brands
in the UK, we operate two premium/luxury ships. Cunard'sships that evoke a golden era of luxurious cruising with one additional ship,Queen Elizabeth, contracted for delivery in 2010. Cunard’s flagship, the Queen Mary 2, is the largest and grandest ocean liner in the world and operates the northern transatlantic crossing route as well as other itineraries around the world. The
Queen Elizabeth 2, Cunard's former flagship, primarily serves UK-based
passengers from Southampton, England and has offered a world cruise, since 1975.
Cunard expects its nextMediterranean and Northern European voyages and a fall Caribbean program. Cunard’s newest ship, the Queen Victoria to begin service in December
2007. Cunard's ships offer voyages to worldwide destinations,, is a marriage of heritage and innovation with manya three tier grand lobby that offers a sense of the voyages ranging generally between six and 31 days, but with some three day
voyages to give passengerslavish lifestyle that its guests experience onboard. Queen Victoriawill embark on a chance to get a taste of the Cunard experience and
the 122-day world cruise which gives passengers a chanceprior to indulge themselves
during a longer vacation.
The Ocean Village brand was launched in spring 2003, and consists of one
contemporary ship serving the UK. This brand targets a young and active customer
base and its cruise product emphasizes informality, health and well-being. The
brand attracts a high proportion of passengers new to cruising. The Ocean
Village ship offers one or two week cruises, together with cruise and stay
holidays, and operatessailing out of Heraklion, Crete in the Mediterranean duringSouthampton throughout the summer seasonof 2010 on a series of Northern Europe and Mediterranean voyages followed by a fall Mediterranean program. Most of Cunard’s voyages range from Barbados in the Caribbean during the winter season.
In spring 2007, the 1,666 passenger capacity AIDAblu, which is currently
operated by AIDA, will transferseven to Ocean Village as the Ocean Village Two. The
Ocean Village Two will have Palma, Majorca as a homeport during the summer
season14 days with two world cruises of 96 and will have Barbados as a homeport during the winter season, replacing
the Ocean Village which will move its winter homeport to Jamaica.
Swan Hellenic's 678 passenger capacity Minerva II operates a program of
premium discovery cruises, principally for UK sourced passengers, however, in
April 2007 Swan Hellenic will sail its last cruise and the Minerva II will be
transferred to Princess and renamed the Royal Princess.
7
B. Southern Europe
101 days.
b. | Continental Europe |
The main countries in southerncontinental Europe for sourcing cruise passengers are Germany, Italy, France and Spain. Together, these main countries generated approximately 1.12.4 million cruise passengers in 2005.2008 and we estimate that approximately 2.8 million passengers took a cruise in 2009. Cruising by passengers from Italy, France and
Spain hadthese countries increased by a compound annual growth rate in the number of passengers carried of approximately 12.8%11.7% between 20002003 and 2005.2008. We believe that Southerncontinental Europe is
also relatively underdevelopedhas significant growth potential for the cruise industry.industry because the market penetration level is estimated at approximately one-third of North America’s market penetration level. We intend to increase our penetration in southerncontinental Europe primarily through Costa, AIDA and Ibero.
9
Costa is Italy’s and Europe’s #1 Cruise Line based on guests carried and ship capacity, and boasts over 61 years of cruising history. Costa is one of the most recognized cruise brands marketed in Europe. In 2009 Costa took delivery of two new cruise ships and now operates 1114 contemporary ships, with anthree additional ship expected to
begin serviceships,Costa Deliziosa,Costa FavolosaandCosta Fascinosa,contracted for delivery, one in fiscal 2007, two ships in fiscal 2009each of 2010, 2011 and one ship in 2010.
Costa's ships operate in Europe from spring to fall. From fall to spring Costa
repositions five of its ships to the Caribbean and South America, while also
maintaining a year-round presence with three of its ships in the Mediterranean
region. Costa2012. This is the number onelargest increase in passenger capacity currently on order by any cruise linebrand. With these three new ship additions, net ofCosta Europaleaving the fleet in continental Europe based on
passengers carried and2010, Costa’s existing capacity of its ships, principally serving customers in
Italy, France, Germany and Spain. Headquartered in Italy, will grow by 24%.
Costa offers guests an international and multi-lingual ambiance with an Italian touch. Costa principally serves customers in Italy, France, Germany and Spain, but its 1.3 million guests in 2009 came from over 170 countries. The Costa brand offers a more traditional product catering to an older demographic in Germany and a higher-end contemporary product in Spain and thus segments these markets where we also own and operate the AIDA and Ibero brands.
The Costa ships call on 114 European and Middle Eastern250 ports around the world, with 83100 different itineraries, and sail to various other ports in the Caribbean and South America, with most
cruises ranging from seven to 11 days. In February 2007, we entered intoCosta’s ships operate in Europe from spring to fall. From fall 2009 to spring 2010 Costa repositioned three of its ships to the Caribbean, three of its ships to South America, two of its ships to the Arabian Gulf to be based in Dubai, United Arab Emirates (“U.A.E.”), one of its ships to the Indian Ocean to be based from the Island of Mauritius, one ship offering 18-day winter cruises between Savona, Italy and Dubai, U.A.E. and maintains a letteryear-round presence with three of intent with Orizonia
Corporation, Spain's largest travel company, which operates its own cruise fleet
under its Iberojet division, to form a joint venture to operate and expand the
existing Iberojet Cruceros brand in Spain. Iberojet Cruceros currently operates
two cruise ships, the 834-passenger Grand Voyager, built in 2000, and the
1,196-passenger Grand Mistral, constructed in 1999, which represent the newest ships in the contemporary Spanish cruise segment. Under the proposed agreement,
the two existing vessels would be transferred by Iberojet to the joint venture.
The intention is to grow that fleet over the next several years through the
acquisitionMediterranean. See Part I, Item 1. Business. B. “Cruise Operations – Asia” for additional discussion of existing tonnage from our current fleet. The Iberojet cruise
business being contributed will be valued at E320 million, with E180 millionCosta’s expanding operations in debt, representing a net equity value of E140 million. We will pay Iberojet E105
million for our 75% ownership interestAsia.
AIDA, which began operating in the joint venture and Iberojet will
own the remaining 25%. We cannot be certain that this transaction will
ultimately be completed on these or any other terms.
C. Germany
Germany is the largest source for cruise passengers in continental Europe,
with approximately 0.6 million cruise passengers in 2005. Germany had a compound
annual growth rate in the number of cruise passengers carried of approximately
11.0% between 2000 and 2005. We believe that Germany is also a relatively
underdeveloped region for the cruise industry. The main destinations visited by
German cruise passengers are the Mediterranean and the Caribbean. Other popular
destinations for German cruise passengers include Scandinavia, the Atlantic
Islands and the Arabian Gulf.
AIDA, which1996, sources substantially all of its passengersguests from German
speaking countries,Germany, Austria, and German-speaking Switzerland, and is the clear leader and most recognized cruise brand in the German cruise segment.market. AIDA operates foursix contemporary ships, with onethree additional ship expected to begin
serviceships contracted for delivery, one in each of fiscal2010, 2011 and 2012. With these three new ship additions, AIDA’s existing capacity will grow by 67%. AIDA’s current generation of vessels, includingAIDAdiva, AIDAbellaandAIDAluna,which AIDA took delivery of in 2007, 2008 and 2009, and 2010. Each of these new ships has
a passenger capacity 22% larger thanrespectively, are innovative. For example, AIDA introduced the largest ship in AIDA's current fleet.
The new vessels are innovative and high quality, introducing for example the
'Theatrium' as a central meeting place; with a market character that provides“Theatrium,” a completely new space concept that provides guests a central meeting space and newan enhanced entertainment ideas. Partially offsetting
this capacity increase,venue. For the next three newbuilds, commencing with theAIDAblu in 2010, the spa concept has been further developed, including 30 spa suites and veranda cabins. Additional product innovations onAIDAblu will be transferred to the Ocean Village
brand in spring 2007.
AIDA'sBrauhaus, the first brewery on a cruise ship.
AIDA’s product is especially tailored for the German-speaking market and offers an exceptionally relaxed, yet active, cruising experience with an emphasis on lifestyle, choice, informality, friendliness and activity. Spa and fitness areas and higha variety of dining options, ranging from informal, but excellent quality but informal dining optionsbuffets, to grills and exclusive restaurants, characterize the experience onboard the vessels.
AIDA's ships primarily offer seven day trips that allow
AIDA offers its guests cruises generally from four to easily
book back-to-back cruise vacations. AIDA allows for an easy selling and booking
experience by offering relatively few cabin categories and two seasons.14 days, while calling on approximately 140 ports. During the summer, the AIDA ships sail in the Mediterranean, and the North Sea, the Baltic Sea and Baltic
Seas, calling on approximately 50 ports,Canada/New England, while itineraries for the winter include the Caribbean, Central America, the Western Mediterranean, the Atlantic Islands,Isles, the Arabian Gulf and Trans-Suez Canal passages. In December 2006,the fall of 2009, AIDA began offering Southeast Asia cruises, which visit Singapore, Thailand, Vietnam, India and other countries in this region.
10
In July 2009, we entered intopurchased the remaining 25% minority interest in Ibero, which is our wholly-owned Spanish cruise line that began operations in 2003. Ibero currently operates three contemporary cruise ships and generally offers cruises of seven days. In November 2009, we transferred Carnival Cruise Lines’ 1,440-passenger capacityHoliday to Ibero. The renamedGrand Holiday is currently undergoing a lettermulti-million dollar refurbishment, which includes, among other things, the remodeling of intent with TUI AG, Europe's
biggest tour operator, to form a joint venture to develop, marketguest accommodations and operate
two cruise brands for
8
German-speaking holiday market. Under the proposed agreement, AIDA Cruises
will be contributed by usspa facilities, before her first sailing in May 2010. Substantially all of Ibero’s guests are sourced from Spain and Brazil. Ibero’s ships are especially tailored to the joint ventureSpanish market, including Spanish-speaking officers and crew as well as Mediterranean and Spanish-style food and entertainment. Ibero’s three ships in which TUIoperation were repositioned to South America in November 2009 to operate Ibero cruises along the Brazilian coast through March 2010. Eight different itineraries are being offered from the homeports of Santos and Rio de Janeiro, Brazil. From March/May to October 2010, all of Ibero’s ships will buy an
interest. In addition, a new TUI Cruises brand will be created that will target
a different segment of the German cruise marketoffer seven-day Mediterranean and Northern European sailings from AIDA Cruises. AIDA's
business was valued at 1.9 billion euros ($2.51 billion based on the November
30, 2006 exchange rate) for inclusion in the joint venture, which will be formed
with 600 million euros ($792 million based on the November 30, 2006 exchange
rate) of indebtedness. The letter of intent provides for TUI to initially
purchase 5% of the joint venture in 2007,Barcelona and it is expected that they will
purchase another 20% in 2010. The purchase price will be paid to us in cash at
the closing of each transaction based on a net equity value of 1.3 billion euros
($1.72 billion based on the November 30, 2006 exchange rate). If the initial 5%
purchase closes in 2007, Carnival would expect to record a pretax gain of
approximately $80 million. Another gain would be recorded at the time of closing
of the subsequent 20% purchase in 2010. Apart from those gains, we believe that
the transaction will be neutral to earnings for the 12-month period following
the transaction closing, which is expected in the first half of 2007, pending
approval of both companiesMalaga, Spain; Venice, Italy; Athens, Greece; Istanbul, Turkey; Copenhagen, Denmark and regulators. We cannot be certain that this
transaction will ultimately be completed on these or any other terms.
IV. Australia, New Zealand and China
Helsinki, Finland.
IV. | Australia and New Zealand |
Cruising in Australia and New Zealand continues to develop. Approximately 195,000We estimate that approximately 340,000 Australians and New Zealanders took cruise vacations in 2005.2008 and we estimate that approximately 425,000 passengers cruised in 2009. Cruising by passengers from these countries increased by a compound annual growth rate of approximately 15.1% between 2003 and 2008. We serve this region primarily through the contemporary P&O Cruises Australia brand, which is the leading cruise line in Australia and New Zealand. In addition, our premium brand Princess Cruises has a significant presence in the Australian market, thus allowing us to segment this market. We believe that the Australian and New Zealand market has significant growth potential for the cruise industry because the market penetration level is estimated at approximately 44% of North America’s market penetration level.
P&O Cruises Australia, is a cruise brand thatwith over 75 years of cruising experience, caters specifically to Australians and New Zealanders. Its contemporary ships, the Pacific Sun and the
Pacific Star, offer seven to 14 day cruises from Sydney, Brisbane and Auckland
to Fiji, New Caledonia, Queensland and Vanuatu. In late 2007, the Regal Princess
will be transferred from Princess to P&O Cruises Australia is more than doubling its fleet capacity with the transfer of the two Ocean Village ships. The first ship was transferred in November 2009 and was renamedPacific Jewel.Pacific Jewelhas just completed a multi-million dollar refurbishment and has more balconies than any contemporary ship deployed year-round from Australia, an on-deck high wire circus show and the “Salt Grill” restaurant, a new dining concept developed with Australia’s first cruise celebrity chef, Luke Mangan. The second ship is planned to be transferred in November 2010 and will sail asbe renamedPacific Pearl. Pacific Pearl will also undertake a major refurbishment prior to her deployment in the Australian and New Zealand markets with an emphasis on tailoring the vessel for family cruising.
Its three contemporary ships,Pacific Dawn. In addition, Princess homeports theDawn, Pacific Princess inJewel andPacific Sun, generally offer cruises from seven to 10 days. The ships are homeported from Sydney and Brisbane, Australia for a part of the year where it offers cruises toand Auckland, New Zealand. In 2010, with the introduction of thePacific Jewel, P&O Cruises Australia will also start homeporting from Newcastle and Fremantle, Australia. These cruises enable guests to discover the islands of the South Pacific from New Caledonia to Tahiti, as well as exploring Australia’s magnificent coast line, New Zealand and Asia.
11
Princess deploys bothSun PrincessandDawn Princess in the Australian market on a year-round basis for cruises departing from the homeports of Fremantle, Melbourne and Sydney, Australia. Princess’ cruises visit the South Pacific islands, Australia, New Zealand and Asia; and generally range from 13 to 17 days, with one world cruise of 104 days.
V. | Asia |
We began sourcing passengers from China and the surrounding markets in 2006. In 2008, we carried approximately 19,000 Chinese guests on cruise vacations and in 2009 we carried 33,000 Chinese guests, a 74% increase. We source most of our Chinese guests from the cities of Beijing and Shanghai and the province of Guangdong, which have a combined population of over 130 million. Tourism is one of the most rapidly growing sectors in the Chinese economy as Chinese discretionary income has increased by a compound average growth rate of 10.4% over the last five years. More than 40 million Chinese tourists traveled abroad in 2007. This figure is forecast by us to increase to over 50 million by 2010. We believe this market has significant cruise industry growth potential given its early stage of development, large population, easing of travel restrictions and expanding international tourist travel.
Costa Asia began its contemporary cruise operations in July 2006 Costa began homeporting the withCosta Allegra being homeported out of Shanghai, China to cater primarily to the Chinese market. China is a new and untested
market andsurrounding markets. Costa iswas the first international cruise line to homeport a ship therein China. During 2009,Costa Classica began operating cruises tailored specifically to Chinese guests; more than doubling Costa Asia’s capacity in this market. The Chinese vacation market is highly seasonal with short cruises offered primarily to Chinese and source its passengers primarily from China. The ship operates five-daysurrounding market vacationers during the peak Chinese holiday seasons and longer Far East cruises offered principally to Europeans during the non-peak Chinese vacation months. Costa Allegrawill be offering 14-day cruises from Singapore until the end of March 2010. Then she will move to Europe and be replaced by the larger 1,344-passenger capacityCosta Romantica. Costa Romanticawill be dedicated mainly to the local market offering from three to six-day cruises from Tianjin and Shanghai, China until October 2010, and then offering two longer cruises to Nagasaki, JapanSingapore before repositioning to Mauritius in late November 2010. Costa Classicawill be offering 14 and Cheju, South Korea in the
summer and it began operating five-day15-day cruises from Hong Kong in January, March and April 2010 and will be the first ship offering four-day cruises from Hong Kong in February. In May, July, August, September and October 2010 she will be offering from three to six-day cruises from Shanghai. In June 2010,Costa Classica will be sailing from 4 to 6-day cruises out of Hong Kong offering cruises direct from mainland China to Hainan
Island, ChinaTaiwan.
These ships are tailored to the Chinese market, serving Chinese style food and Halong Bay, Vietnam for its 2006 winter season. We cannot be
certain that China or other markets will develop as expected.
V. South America
Cruisebeverages, offering mah-jongg tables in the casino and providing high-end well-known luxury brands in their retail shops. The Costa Asia product is unique, bringing a high European standard of holiday cruising to Chinese and surrounding market guests in their own locality.
VI. | South America |
For many years cruise vacations have been marketed in South America, for many years,principally to Brazilian and Argentinean-sourced passengers, although cruising as a vacation alternative remains in ana relatively early stage of development in the region. Brazil has a population of slightly under 200 million, and their discretionary incomes are expected to grow significantly in the future. Based on our internal estimates, approximately 380,000 Brazilians and Argentineans took a cruise vacation in 2008 and almost half of these guests sailed on a Carnival Corporation & plc brand, and we estimate 550,000 took a cruise vacation in 2009, which is approximately 5% of North America’s market penetration level. Accordingly, we believe this region has significant cruise growth potential.
12
Cruises from South America typically occur during the Southern Hemisphere summer months of November through March, and areMarch. For many years our presence was primarily
seven to nine days in duration. Our presence is primarily represented through the Costa brand, which will operate twois operating three vessels in 2007winter 2010 in this region, theCosta Fortuna and Concordia,Costa Romantica, collectively offering 4,046MagicaandCosta Victoria, totaling 7,608 lower berths. 9
VI. Ship Information
These ships depart from Santos and Rio de Janeiro, Brazil and Buenos Aires, Argentina; with itineraries that put the spotlight on discovering Northeast and Southern Brazil, Uruguay and Argentina. In addition, as previously mentioned, Ibero has deployed three of its ships to Brazil from November 2009 to March 2010, offering eight different Brazilian coast itineraries from the homeports of Santos and Rio de Janeiro, Brazil.
13
VII. | Ship Information |
a. | Ships In Service |
Summary information of our ships in service as of February 12, 2007January 28, 2010 is as follows:
CALENDAR
YEAR PASSENGER
BRAND AND SHIP REGISTRY DELIVERED CAPACITY
-------------- -------- --------- ---------
Carnival Cruise Lines
Carnival Liberty Panama 2005 2,966
Carnival Valor Panama 2004 2,966
Carnival Miracle Panama 2004 2,120
Carnival Glory Panama 2003 2,968
Carnival Conquest Panama 2002 2,966
Carnival Legend Panama 2002 2,120
Carnival Pride Panama 2001 2,120
Carnival Spirit Panama 2001 2,122
Carnival Victory Panama 2000 2,750
Carnival Triumph Bahamas 1999 2,750
Paradise Panama 1998 2,048
Elation Panama 1998 2,050
Carnival Destiny Bahamas 1996 2,634
Inspiration Bahamas 1996 2,050
Imagination Bahamas 1995 2,050
Fascination Bahamas 1994 2,050
Sensation Bahamas 1993 2,050
Ecstasy Panama 1991 2,050
Fantasy Panama 1990 2,054
Celebration Panama 1987 1,484
Holiday Bahamas 1985 1,450
------
Total Carnival Cruise Lines 47,818
------
Princess
Crown Princess Bermuda 2006 3,080
Sapphire Princess Bermuda 2004 2,674
Caribbean Princess Bermuda 2004 3,100
Diamond Princess Bermuda 2004 2,674
Island Princess Bermuda 2003 1,974
Coral Princess Bermuda 2002 1,974
Star Princess Bermuda 2002 2,598
Golden Princess Bermuda 2001 2,598
Tahitian Princess Bermuda 2000 668
Pacific Princess Bermuda 1999 668
Sea Princess Bermuda 1998 2,016
Grand Princess Bermuda 1998 2,592
Dawn Princess Bermuda 1997 1,998
Sun Princess Bermuda 1995 2,022
Regal Princess(a) Bermuda 1991 1,596
------
Total Princess 32,232
------
Costa
Costa Concordia Italy 2006 2,978
Costa Magica Italy 2004 2,702
Costa Fortuna Italy 2003 2,702
Costa Mediterranea Italy 2003 2,114
Costa Atlantica Italy 2000 2,114
Costa Victoria Italy 1996 1,928
Costa Romantica Italy 1993 1,344
Costa Allegra(b) Italy 1992 784
Costa Classica Italy 1991 1,302
Costa Marina Italy 1990 762
Costa Europa Italy 1986 1,488
------
Total Costa 20,218
------
10
CALENDAR
YEAR PASSENGER
BRAND AND SHIP REGISTRY DELIVERED CAPACITY
-------------- -------- --------- ---------
Holland America Line(c)
Noordam Netherlands 2006 1,918
Westerdam Netherlands 2004 1,848
Oosterdam Netherlands 2003 1,848
Zuiderdam Netherlands 2002 1,848
Zaandam Netherlands 2000 1,432
Amsterdam Netherlands 2000 1,380
Volendam Netherlands 1999 1,432
Rotterdam Netherlands 1997 1,316
Veendam Netherlands 1996 1,258
Ryndam Netherlands 1994 1,258
Maasdam Netherlands 1993 1,258
Statendam Netherlands 1993 1,258
Prinsendam Netherlands 1988 794
------
Total Holland America Line 18,848
------
P&O Cruises
Arcadia Bermuda 2005 1,948
Oceana Bermuda 2000 2,016
Aurora UK 2000 1,870
Oriana Bermuda 1995 1,818
Artemis Bermuda 1984 1,188
------
Total P&O Cruises 8,840
------
AIDA
AIDAaura Italy 2003 1,266
AIDAvita Italy 2002 1,266
AIDAcara Italy 1996 1,180
AIDAblu(d) Italy 1990 1,666
------
Total AIDA 5,378
------
Cunard
Queen Mary 2 UK 2003 2,592
QE2 UK 1969 1,788
------
Total Cunard 4,380
------
P&O Cruises Australia
Pacific Sun UK 1986 1,480
Pacific Star UK 1982 994
------
Total P&O Cruises Australia 2,474
------
Ocean Village
Ocean Village UK 1989 1,578
Swan Hellenic
Minerva II(e) Marshall Islands 2001 678
Seabourn
Seabourn Legend Bahamas 1992 208
Seabourn Spirit Bahamas 1989 208
Seabourn Pride Bahamas 1988 208
------
Total Seabourn 624
------
Windstar
Wind Surf Netherlands 1990 312
Wind Spirit Bahamas 1988 148
Wind Star Bahamas 1986 148
-------
Total Windstar 608
-------
Total 143,676
=======
(a) The Regal Princess will be transferred to P&O Cruises Australia in October
2007 and renamed the Pacific Dawn.
11
(b) The Costa Allegra has been marketed primarily to Chinese-sourced
passengers since the summer
Brand and Ship | Registry | Calendar Year Delivered | Passenger Capacity | |||
Carnival Cruise Lines | ||||||
Carnival Dream | Panama | 2009 | 3,642 | |||
Carnival Splendor | Panama | 2008 | 2,998 | |||
Carnival Freedom | Panama | 2007 | 2,966 | |||
Carnival Liberty | Panama | 2005 | 2,966 | |||
Carnival Valor | Panama | 2004 | 2,966 | |||
Carnival Miracle | Panama | 2004 | 2,118 | |||
Carnival Glory | Panama | 2003 | 2,966 | |||
Carnival Conquest | Panama | 2002 | 2,966 | |||
Carnival Legend | Panama | 2002 | 2,118 | |||
Carnival Pride | Panama | 2001 | 2,118 | |||
Carnival Spirit | Panama | 2001 | 2,120 | |||
Carnival Victory | Panama | 2000 | 2,750 | |||
Carnival Triumph | Bahamas | 1999 | 2,750 | |||
Carnival Paradise | Panama | 1998 | 2,048 | |||
Carnival Elation | Panama | 1998 | 2,050 | |||
Carnival Destiny | Bahamas | 1996 | 2,634 | |||
Carnival Inspiration | Bahamas | 1996 | 2,050 | |||
Carnival Imagination | Bahamas | 1995 | 2,050 | |||
Carnival Fascination | Bahamas | 1994 | 2,050 | |||
Carnival Sensation | Bahamas | 1993 | 2,050 | |||
Carnival Ecstasy | Panama | 1991 | 2,050 | |||
Carnival Fantasy | Panama | 1990 | 2,054 | |||
Total Carnival Cruise Lines | 54,480 | |||||
Princess | ||||||
Ruby Princess | Bermuda | 2008 | 3,084 | |||
Emerald Princess | Bermuda | 2007 | 3,082 | |||
Crown Princess | Bermuda | 2006 | 3,080 | |||
Sapphire Princess | Bermuda | 2004 | 2,678 | |||
Caribbean Princess | Bermuda | 2004 | 3,114 | |||
Diamond Princess | Bermuda | 2004 | 2,678 | |||
Island Princess | Bermuda | 2003 | 1,974 | |||
Coral Princess | Bermuda | 2002 | 1,974 | |||
Star Princess | Bermuda | 2002 | 2,598 | |||
Royal Princess(a) | Bermuda | 2001 | 710 | |||
Golden Princess | Bermuda | 2001 | 2,636 | |||
Ocean Princess | Bermuda | 2000 | 676 | |||
Pacific Princess | Bermuda | 1999 | 676 | |||
Sea Princess | Bermuda | 1998 | 2,016 | |||
Grand Princess | Bermuda | 1998 | 2,592 | |||
Dawn Princess | Bermuda | 1997 | 1,998 | |||
Sun Princess | Bermuda | 1995 | 2,022 | |||
Total Princess | 37,588 | |||||
Costa | ||||||
Costa Pacifica | Italy | 2009 | 2,978 | |||
Costa Luminosa | Italy | 2009 | 2,260 | |||
Costa Serena | Italy | 2007 | 2,978 | |||
Costa Concordia | Italy | 2006 | 2,978 | |||
Costa Magica | Italy | 2004 | 2,702 | |||
Costa Fortuna | Italy | 2003 | 2,702 | |||
Costa Mediterranea | Italy | 2003 | 2,114 | |||
Costa Atlantica | Italy | 2000 | 2,114 | |||
Costa Victoria | Italy | 1996 | 1,928 | |||
Costa Romantica | Italy | 1993 | 1,344 | |||
Costa Allegra | Italy | 1992 | 784 | |||
Costa Classica | Italy | 1991 | 1,302 | |||
Costa Marina | Italy | 1990 | 754 | |||
Costa Europa(b) | Italy | 1986 | 1,488 | |||
Total Costa | 28,426 | |||||
14
Brand and Ship | Registry | Calendar Year Delivered | Passenger Capacity | |||
Holland America Line | ||||||
Eurodam | Netherlands | 2008 | 2,104 | |||
Noordam | Netherlands | 2006 | 1,918 | |||
Westerdam | Netherlands | 2004 | 1,916 | |||
Oosterdam | Netherlands | 2003 | 1,916 | |||
Zuiderdam | Netherlands | 2002 | 1,916 | |||
Zaandam | Netherlands | 2000 | 1,432 | |||
Amsterdam | Netherlands | 2000 | 1,380 | |||
Volendam | Netherlands | 1999 | 1,432 | |||
Rotterdam | Netherlands | 1997 | 1,404 | |||
Veendam | Netherlands | 1996 | 1,350 | |||
Ryndam | Netherlands | 1994 | 1,260 | |||
Maasdam | Netherlands | 1993 | 1,258 | |||
Statendam | Netherlands | 1993 | 1,258 | |||
Prinsendam | Netherlands | 1988 | 834 | |||
Total Holland America Line | 21,378 | |||||
P&O Cruises | ||||||
Ventura | Bermuda | 2008 | 3,078 | |||
Arcadia | Bermuda | 2005 | 2,016 | |||
Oceana | Bermuda | 2000 | 2,016 | |||
Aurora | Bermuda | 2000 | 1,870 | |||
Oriana | Bermuda | 1995 | 1,818 | |||
Artemis(c) | Bermuda | 1984 | 1,200 | |||
Total P&O Cruises | 11,998 | |||||
AIDA | ||||||
AIDAluna | Italy | 2009 | 2,050 | |||
AIDAbella | Italy | 2008 | 2,050 | |||
AIDAdiva | Italy | 2007 | 2,050 | |||
AIDAaura | Italy | 2003 | 1,266 | |||
AIDAvita | Italy | 2002 | 1,266 | |||
AIDAcara | Italy | 1996 | 1,180 | |||
Total AIDA | 9,862 | |||||
Ibero | ||||||
Grand Voyager | Portugal | 2000 | 832 | |||
Grand Mistral | Portugal | 1999 | 1,244 | |||
Grand Celebration | Portugal | 1987 | 1,494 | |||
Grand Holiday | Portugal | 1985 | 1,440 | |||
Total Ibero | 5,010 | |||||
P&O Cruises Australia | ||||||
Pacific Dawn | UK | 1991 | 1,596 | |||
Pacific Jewel | UK | 1990 | 1,668 | |||
Pacific Sun | UK | 1986 | 1,480 | |||
Total P&O Cruises Australia | 4,744 | |||||
Cunard | ||||||
Queen Victoria | UK | 2007 | 1,988 | |||
Queen Mary 2 | UK | 2003 | 2,620 | |||
Total Cunard | 4,608 | |||||
Ocean Village(d) | ||||||
Ocean Village | UK | 1989 | 1,578 | |||
Seabourn | ||||||
Seabourn Odyssey | Bahamas | 2009 | 450 | |||
Seabourn Legend | Bahamas | 1992 | 208 | |||
Seabourn Spirit | Bahamas | 1989 | 208 | |||
Seabourn Pride | Bahamas | 1988 | 208 | |||
Total Seabourn | 1,074 | |||||
Total | 180,746 | |||||
15
(a) | Royal Princess will be transferred to P&O Cruises UK in April 2011 and be renamedAdonia. |
(b) | Costa Europa will be operated by an unrelated entity under a long-term bareboat charter agreement, commencing April 2010 and expiring April 2020. |
(c) | Artemis was sold in October 2009 to an unrelated entity and is being operated by P&O Cruises under a bareboat charter agreement until April 2011. |
(d) | The Ocean Village brand is being phased-out with the planned transfer of its ship to P&O Cruises Australia in November 2010. |
b. | Ships Under Contract for Construction |
Summary information of 2006.
(c) Since November 2004, the 1,214 passenger former Noordamour ships under contract for construction as of January 28, 2010 is being operated
by an unrelated entity under a long-term bareboat charter agreement and,
accordingly, is excluded from Holland America Lines' capacity.
(d) The AIDAblu will be transferred to Ocean Village in the spring of 2007 and
renamed the Ocean Village Two.
(e) The Minerva II will be transferred to Princess in April 2007 and renamed
the Royal Princess.
VII. Characteristics of the Cruise Vacation Industry
A. Strong Growth
Cruise vacations have experienced significant growth in recent years. The
number of new cruise ships currently on order from shipyards indicatesas follows:
Brand and Ship | Expected Service Date(a) | Passenger Capacity | ||
Carnival Cruise Lines | ||||
Carnival Magic | 5/11 | 3,690 | ||
Newbuild | 6/12 | 3,690 | ||
Total Carnival Cruise Lines | 7,380 | |||
Costa | ||||
Costa Deliziosa | 2/10 | 2,260 | ||
Costa Favolosa | 7/11 | 3,012 | ||
Costa Fascinosa | 5/12 | 3,012 | ||
Total Costa | 8,284 | |||
Holland America Line | ||||
Nieuw Amsterdam | 7/10 | 2,106 | ||
P&O Cruises | ||||
Azura | 4/10 | 3,100 | ||
AIDA | ||||
AIDAblu | 2/10 | 2,192 | ||
AIDAsol | 4/11 | 2,194 | ||
Newbuild | 5/12 | 2,194 | ||
Total AIDA | 6,580 | |||
Cunard | ||||
Queen Elizabeth | 10/10 | 2,092 | ||
Seabourn | ||||
Seabourn Sojourn | 6/10 | 450 | ||
Seabourn Quest | 6/11 | 450 | ||
Total Seabourn | 900 | |||
Total | 30,442 | |||
(a) | The expected service date is the month in which the ship is currently expected to begin its first revenue generating cruise. All of our ship construction contracts are with the Fincantieri shipyards in Italy, except for AIDA’s which are with the Meyer Werft shipyard in Germany and Seabourn’s which are with the T. Mariotti shipyard in Italy. |
VIII. | Characteristics of the Cruise Vacation Industry |
a. | Exceptional Value Proposition |
We believe that the growthcost to a guest for a cruise vacation represents an exceptional value in comparison to other comparable land-based vacations. This is especially true when considering that a cruise capacity is setprovides its guests with transportation to continuevarious destinations, while also providing hotel accommodations, food and some entertainment for one all-inclusive, competitive price. In order to make cruising even more cost effective and more easily accessible to our guests, we offer a number of years.drive-to-homeports, which reduces certain cruise guests’ overall vacation costs because the air transportation costs are eliminated.
16
b. | Relatively Low Market Penetration Levels |
Based on industry data, the 2008 annual penetration rate, computed based on the number of annual cruise passengers as a percentage of the total population, is 3.0% for North America, 2.4% in the UK, 0.9% in continental Europe (continental Europe represents Germany, Italy, France, Spain and Portugal) and 1.3% for Australia and New Zealand. Only about 20% of the U.S. population, 9 to 10% of the UK population and 4 to 5% of the continental European population have ever taken a cruise. In order to
fill this new capacity, continued growthaddition, Europeans have significantly more vacation days in demand acrossa year than North Americans, which presents opportunities for increases in the industry will be
required. Given the historical growth rate of cruising and the relative lowEuropean penetration levels as compared to the level in major vacation regions, we believe that there are
significant opportunities for growth.
InNorth America.
Elsewhere in the few years prior to 2004, the cruise industry experienced
significant pressure on cruise pricing, which we believe was ultimately the
result of, among other things, various adverse international geopolitical and
economic conditions and events,world, such as terrorism, the war in Iraq,Asia and the riskSouth America, cruising is at an early stage of other armed conflicts, adverse publicity, increases in new cruise ship
capacity, ship incidents,development and competition from cruise ship and other vacation
alternatives. During 2004 and 2005 the cruise industry had very robust years,
which saw significant increases in both capacity and net revenue yields. During
2006, the cruise industry continued to experience solid growth for its
non-Caribbean product offerings, however,has far lower penetration rates. However, there were ahave been an increasing number of factors, such
as a weaker U.S. economy, including the impact of higher fuel costs and higher
U.S. interest rates, and the after effects of the devastating 2005 hurricane
season, which we believe had adverse effects on vacationers' discretionary
income and this group's confidencethese relatively lower penetrated countries in the U.S. economy. These factors
contributed to a reduction in North Americanworld where economic growth has fueled an increasing demand for Caribbean cruises and,
accordingly, resulted in lower pricing for most of our Caribbean cruise
itineraries, especially our shorter duration cruises. Factors such as these or
others could adversely impact future cruise industry growth if they were to
occur or continue to exist in the future.
B. Wide Appeal of Cruising
vacations, including cruising.
c. | Wide Appeal |
Cruising appeals to a broad demographic range. Industry surveys estimate
that there are approximately 127 million potential passengers for cruisingrange of ages and income levels. The average age of a cruise guest in North America (defined as membersis 48 years old and we believe that it is a similar age for the rest of households withthe world. However, cruising is designed to provide something for every generation, from the youth clubs for four to five year olds to the elegance, style and sophistication of a minimumbygone era provided to our more senior guests. Cruising also offers a very broad range of price points to attract people from substantially all income levels. The range of $40,000, that are headed bypricing can vary from a person whothree-day cruise from a local homeport in an inside state room on a contemporary line to a penthouse suite on a world cruise, on a premium or luxury line.
d. | Positive Guest Demographics |
The age of the U.S., Canadian and Western European populations is at least 25 years old). According to
these surveys, about half of these individuals have expressed an interest in
taking a cruiseincreasing, primarily as a vacation alternative, and over 60% of worldwide cruise
passengers are over the age of 40. The sizeresult of the North American populationaging of the Baby-Boom generation and healthcare advancements. Therefore, between ages2010 and 2020, the number of people in the cruise industry’s primary age group of 45 years and 74 isolder are expected to increase 17% between 2007grow by 20 million, or 15%, in the U.S. and 2017.Canada, and 17 million, or 12%, in the major Western European countries. We believe the cruise industry is well-positioned to take advantage of these favorable demographic trends which are impacting its major markets.
C. Relatively Low Penetration Levels
North America has higher cruising penetration rates than do cruise markets
in Europe and Asia. Nevertheless, based upon information obtained from the
e. | High Guest Satisfaction Rates |
Cruise Lines International Association, or CLIA, a leading trade group in the
U.S., only approximately 17% of the U.S. population has ever taken a cruise and
only 10% has done so in the past three years. In the UK, where there has been
significant expansion in the number of cruise passengers carried over the last
five years, cruising penetration levels per capita are only approximately
three-fifths of those of North America. In the principal vacation regions in
continental Europe, cruising penetration levels per capita are estimated to be
less than one-fifth of those in North America. Elsewhere in the world cruising
is at an early stage of development and has far lower penetration rates.
D. Satisfaction Rates
Cruise passengersguests tend to rate their overall satisfaction with a cruise-based vacation higher than comparable land-based hotel and resort vacations. According to industry surveys, North American cruise guests have a total satisfaction rating of 95%, with nearly 45% of cruise guests stating that they are extremely satisfied with the experience, which is defined in the surveys as the highest satisfaction rating of any vacation alternative they have experienced. Based on our internal surveys our European cruise guests are very satisfied with their cruise vacations, which we believe is a very positive response to our European cruise offerings.
f. | Favorable Supply Versus Demand Balance |
Our current intention is to have an average of two to three new cruise ships enter service annually in 2012 and beyond, which is below our recent growth levels. In addition we believe that some of our competitors will also be slowing down their future capacity growth, as evidenced by some recent cancellations of ship orders and the expiration of their options to purchase new ships. Moreover, due to the significant amount of capital required to purchase a new cruise ship and the complexities surrounding their operation, the cruise industry has high barriers of entry. Based on the above factors, among others, we expect long-term cruise industry supply growth to slow, while we expect demand to accelerate as global economies recover and emerging markets continue to develop. We believe that a substantial number of cruise passengers think the
value of their cruise vacation experience is as good as, or better than, the
value of other comparable vacation alternatives.
12
VIII. Passengers, Capacity and Occupancy
this favorable supply versus demand balance will have positive impacts on our ability to profitably grow our business.
17
IX. | Passengers, Capacity and Occupancy |
Our cruise operations had worldwide cruise passengers, passenger capacity and occupancy as follows (a):
FISCAL CRUISE PASSENGER
YEAR PASSENGERS CAPACITY OCCUPANCY(b)
------ ---------- --------- ------------
2002 3,549,000 67,282 105.2%
2003 5,038,000 113,296 103.4%
2004 6,306,000 129,108 104.5%
2005 6,848,000 136,960 105.6%
2006 7,008,000 143,676 106.0%
(a) Information presented is as of the end of our fiscal year for passenger
capacity. Carnival plc's information is only included since April 17,
2003, the period subsequent to the completion of the DLC transaction.
(b) In accordance with cruise industry practice, occupancy is calculated using
a denominator of two passengers per cabin even though some cabins can
accommodate three or more passengers. The percentages in excess of 100%
indicate that on average more than two passengers occupied some cabins.
follows:
Fiscal | Cruise Passengers | Passenger Capacity | Occupancy(a) | |||
2005 | 6,848,000 | 136,960 | 105.6% | |||
2006 | 7,008,000 | 143,676 | 106.0% | |||
2007 | 7,672,000 | 158,352 | 105.6% | |||
2008 | 8,183,000 | 169,040 | 105.7% | |||
2009 | 8,519,000 | 180,746 | 105.5% |
(a) | In accordance with cruise industry practice, occupancy is calculated using a denominator of 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. |
Our passenger capacity has grown from 67,282136,960 berths at November 30, 20022005 to 143,676180,746 berths at November 30, 2006,2009, primarily because of the deliveries of 18 new cruise ships during this four-year period and the 34,428 berths added as
a result of the DLC transaction with P&O Princess during 2003.period. See Part I, Item l. Business,Business. B. - "Cruise Operations-Ship Information"“Cruise Operations – Ship Information” for additional information.
The occupancy level on our ships during each quarter indicated below was as follows:
Quarters Ended Occupancy
----------------- ---------
February 28, 2005 103.8%
May 31, 2005 104.8%
August 31, 2005 110.9%
November 30, 2005 102.7%
February 28, 2006 104.2%
May 31, 2006 105.4%
August 31, 2006 111.0%
November 30, 2006 103.4%
IX. Cruise Ship Construction and Cruise Port Facility Development and
Operations
Occupancy | ||||
Quarters Ended | 2009 | 2008 | ||
February 28/29 | 103.9% | 104.3% | ||
May 31 | 103.3% | 104.8% | ||
August 31 | 111.4% | 110.9% | ||
November 30 | 103.2% | 102.6% |
X. | Cruise Ship Construction and Cruise Port and Repair Facility Development and Operations |
As of February 12, 2007,January 28, 2010, we had signed agreements with three shipyards providing for the construction of 2013 additional cruise ships scheduled to enter service between March 2007February 2010 and June 2011.2012. These agreements cannot be cancelled by either party without cause, and such cancellation will subject the defaulting party to contractual liquidated damages. See Part I, Item 1. Business. B. “Cruise Operations – Ship Information” and Note 6, "Commitments"“Commitments” to our Consolidated Financial Statements in Exhibit 13 to this joint Annual Report on
Form 10-K.
Primarily in cooperation with private or public entities, we10-K for additional information regarding our ship commitments.
We are engagedinvolved in the development of new or enhanced cruise port facilities. These facilities are expected to provide our passengersguests with an improved vacation experience. Our involvement is usually in cooperation with governmental entities and typically includes providing cruise port facility development and management expertise. We sometimes assist by providing directexpertise and financial support
for port development projects. However, most of the time, our financial
commitment is provided bycommitments that are limited to long-term port usage agreements. However, sometimes we provide direct financial support or develop the port infrastructure ourselves.
During 2006,2009, we were involved in various stages of involvement with the development, enhancement and/or financing of government and enhancement ofprivately-owned and operated cruise port facilities in Barcelona, Spain,Galveston, Texas; Miami, Florida; Marseilles, France; New York City, New York, Miami, FloridaYork; San Diego, California; San Juan, Puerto Rico; Southampton, England and Naples, Italy.St. Maarten, Netherlands Antilles. In addition, we arecurrently operate or have interests in joint ventures that operate port facilities in Barcelona, Spain; Civitavecchia, Italy; Cozumel, Mexico; Grand Turk, Turks and Caicos Islands; Hamburg, Germany; Juneau, Alaska; Long Beach, California; Naples, Italy; Roatán, Honduras and Savona, Italy.
We own a 40% interest in Grand Bahama Shipyard Ltd. (“GBSL”), which is the largest cruise ship dry-dock repair facility in the process of, or have recently completed negotiations for,
the development of several other port facilities to service our North American
and European guests, including, but not limited to, facilities in Civitavecchia,
Italy, Roatan, Honduras and San Diego, California. In October 2005, our pier
facility in Cozumel, Mexico was destroyed by Hurricane Wilma. This wasworld. Royal Caribbean Cruises Ltd. (“RCCL”), one of our busiest transit portscruise competitors, also owns a 40% interest and the Grand Bahama Port Authority owns 20%. We account for our investment using the equity method, and our total net investment in the world and served over 1.2notes receivable from GBSL were $76 million passengersat November 30, 2009. GBSL had an aggregate of $138 million of outstanding debt to RCCL and us and $5 million outstanding under a revolving credit facility at November 30, 2009. This repair facility, located in 2005. We have begun rebuildingFreeport, Grand Bahama, has three dry-docks, which can accommodate ships up to 137,000 tons. During 2009, RCCL and our brands had an aggregate of 19 ships serviced at this pier and expect to complete construction in
late-2008.
Finally, we currently operate other port facilities in Long Beach,
California, Grand Turk, Turk and Caicos Islands, Juneau, Alaska and Savona,
Italy pursuant to concession agreements with governmental authoritiesfacility. In addition, unaffiliated cruise ships and other third parties. Our Long Beach terminal is onetypes of ships were worked on at this facility. GBSL generated total revenues of $125 million in 2009, the home ports for Carnival
Cruise Lines' U.S. West Coast sailings to Mexico, as well as a transit port for
somemajority of which were derived from work on RCCL and our other brands. Finally, the Savona terminal is the home port for a
number of Costa's ships, which sail in the Mediterranean Sea.
13
X. Cruise Pricing and Payment Terms
cruise ships.
18
XI. | Cruise Pricing and Payment Terms |
Each of our cruise brands publishes brochures with prices for the upcoming seasons. Brochure prices vary by cruise line, by category of cabin, by ship, by season and by itinerary. Brochure prices are regularly discounted through our
early booking discount programs and other promotions. The cruise ticket price typically includes accommodations, most meals, some non-alcoholic beverages, and most onboard entertainment, such as the use of, or admission to, a wide variety of activities and facilities, including a fully equippedfully-equipped casino, nightclubs, theatrical shows, movies, parties, a disco, a jogging track, a health club, swimming pools, sun decks, whirlpools and saunas. Our brands'brands’ payment terms generally require that a passengerguest pay a deposit to confirm their reservationsreservation with the balance due before the departure date, although some of our European brands provide certain of their travel agents and tour operators with credit terms even though these parties typically require the passengerguest to pay for the entire cruise before sailing.
If our guests do not pay a vacation protection premium for the ability to obtain a refund if they cancel their cruise within a pre-defined period before sailing, then they are subject to a cancellation fee, which we recognize in cruise passenger ticket revenues upon cancellation. For those guests who pay a vacation protection premium for the ability to obtain a refund, they will receive all or a portion of their deposit back in accordance with the terms of the program, while we will recognize this premium in other revenues.
Historically, our advance bookings have generally been taken from several months in advance of the sailingdeparture date for all contemporary brands,brand sailings, to more than a year in advance for some of sailing for our luxury brands.and European brand sailings. Generally, the longer the cruise itinerary the further in advance the bookings are made. This lead-time provides us with more time to manage our prices in relation to demand for available cabins, with the goal of achieving higher overall net revenue yields - see "Key(see “Key Performance Indicators"Non-GAAP Financial Indicators” in our Management Discussion and Analysis of Financial Condition and Results of Operations in Exhibit 13 to this joint Annual Report on
Form 10-K.10-K). In addition, some of our fares such as Carnival Cruise Lines'
SupersaverLines’ Early Saver fares, Costa'sCosta’s Pronto Price Savings fares and Holland America Line'sLine’s Early SavingsAdvantage and Mariner Savings fares and Princess's Loveboat Savers plan, are designed to encourage potential passengersguests to book cruise reservations earlier. In addition, AIDA has a "JustAIDA"“JustAIDA” booking program that allows guests to make a reservation two to three months before sailing, but the exact cruise ship and specific itinerary are not determined by AIDA until two weeks prior to sailing in order to help AIDA maximize their net revenue yields.
As a convenience to our guests, we offer to arrange air transportation to and from the port. When a passengerguest elects to purchase air transportation from us, both our cruise revenues and cruise operating expenses generally increase by approximately the same amount. Air transportation prices cantypically vary by gateway and destination. Over the last several years we have generally experienced a lower
numberabout 15% of our guests purchasingpurchased air transportation from us, which weus. We believe this relatively low percentage is partially a result of having opened additional embarkation points closerclose to our guests'guests’ homes as well asand partially due to the wide availability of frequent flyer programs and
competitively-pricedcompetitively priced air tickets sold by third parties. XI. Onboard and Other Revenues
We earn onboard and other revenues from onboard activities and services
notIn addition, for some of our European brands’ cruise itineraries we charter aircraft to facilitate our guests travel to distant locations.
In 2007, we introduced a fuel supplement across substantially all of our cruise brands, which resulted in an additional fee being charged to the guests on these brands, commencing for the most part with cruises departing in early 2008. This temporary fuel supplement, which is included in cruise passenger ticket revenues, was introduced to partially offset a portion of the cruise ticketvery high fuel costs we had been experiencing, and was usually charged on a daily basis, with established total maximum amounts per passenger. As a result of fuel price consistingdeclines in late 2008, substantially all of but not limitedour brands no longer charge the fuel supplement. We reserve the right to casino gaming, barreinstate our fuel supplements and some beverage sales, gift shop sales, entertainment
arcades, shore excursions, art auctions, photo sales, spa services, bingo gameswill continue to monitor our markets and lottery tickets, enhanced dining experiences in alternative restaurants,
video diaries, golf lessons, snorkel equipment rentals, internetreview our position based upon the appropriate facts and telephone
usage and onboard promotional advertising for merchants located at our ports of
call.
Our casinos, which contain slot machines and gaming tables including
blackjack, and in most cases craps and roulette, are open only when our ships
are at sea in international waters or when otherwise specifically permitted by
law. circumstances.
XII. | Onboard and Other Revenues |
Onboard and other activities are provided either directly by us or by independent concessionaires, from which we collectreceive either a percentage of their revenues or a fee. We earn onboard and other revenues from activities and services not included in the cruise ticket price consisting of, but not limited to, bar and some beverage sales, shore excursions, casino gaming, gift shop sales, photo sales, spa services, internet services, cellular phone and telephone usage, art auctions, bingo games and lottery tickets, enhanced dining experiences in alternative restaurants, onboard promotional advertising for merchants located at our ports of call, entertainment
19
arcades, 4D cinema, laundry services, Grand Prix simulators, libraries, ship tours, golf lessons, snorkel and bike equipment rentals, retail port facility rentals, training conference facilities and video diaries.
Our casinos, which are operated directly by us, contain slot machines and a mix of gaming tables. The casinos are only open when our ships are at sea in international waters or when otherwise specifically permitted by law.
Sales to our passengersguests of shore excursions at each ship'sship’s ports of call include, among other things, general sightseeing and adventure outings and local boat and beach parties.parties, typically utilizing locally-owned operators. For the Holland America Line, Princess and PrincessCarnival Cruise Lines ships and our
other brands operatingsailing to destinations in Alaska, shore excursions are operated by Holland America Tours and Princess Alaska Tours, as well as locally-owned operations. For shore excursions in other locations, we typically utilize
locally-owned operations.
operators.
In conjunction with our cruise vacations, substantially all of our cruise brands also
sell pre- andpre-and post-cruise land packages. Packagespackages of one to four nights. Vacation packages offered in conjunction with ports of callships based in the U.S. would generallyNorth America include one to four-night vacations at nearby attractions or other vacation destinations, such as Universal Studios and
Walt Disney World in Orlando, Florida, Busch Gardens in Tampa, Florida, or
individual/multiple city tours of Boston, Massachusetts,Massachusetts; New York City, New York, and/orYork; Seattle, Washington; San Diego, California. PackagesCalifornia and Vancouver, British Columbia. Vacation packages offered in conjunction with ships based in Europe generally include
up to four-night vacations, including stays in well-known European cities such as Athens, Greece,Greece; Barcelona, Spain,Spain; Copenhagen, Denmark,Denmark; London, England,England; Paris, France and Rome, Italy.
14
In conjunction with our Alaska cruise vacations, principally on our Holland America Line, Princess and Carnival Cruise Lines ships, we sell pre- andpre-and post-cruise land packages, utilizing, to a large extent, our transportation and hotel assets.
XII. assets, which revenues are included in our other segment.
XIII. | Sales Relationships and Marketing Activities |
We sell our cruises mainly through travel agents, including wholesalers and Marketing Activities
tour operators. Our individual cruise brands’ relationships with their travel agents are generally independent of each of our other brands, except for certain brands sourcing UK and Australian guests as discussed below. These travel agent relationships are not exclusive and most travel agents also sell cruises and other vacations provided by our competitors. We train and motivate travel agents to support our products with competitive sales and pricing policies and joint marketing programs. We also employ a wide variety of marketing techniques, including websites, seminars and videos, to familiarize agents with our cruise brands and products. As with our brands’ travel agent relationships, each of our brands’ marketing programs are generally independent of each other. In each of our principal markets, we have familiarized the travel agency community with our cruise brands and products.
Travel agents generally receive standard commissions of 10%, plus the potential of additional commissions based on sales volume. During fiscal 2009, no controlled group of travel agencies accounted for 10% or more of our revenues.
We are a customer service-driven company and continue to invest in our service organization to assist travel agents and guests. We believe that our support systems and infrastructure are among the strongest in the vacation industry. We sell our cruises mainly through travel agents, including wholesalers
and tour operators. Our individual cruise brands' relationships with their
travel agents are generally independent of each of our other brands, except for
certain brands sourcing UK and Australian passengers as discussed below. These
travel agent relationships are not exclusive and most travel agents also sell
cruises and other vacations provided by our competitors. Our policy towards
travel agents is to train and motivate them to support our products with
competitive sales and pricing policies and joint marketing programs. We also use
a wide variety of marketing techniques, including websites, seminars and videos,
to familiarize the agents with our cruise brands and products. As with our
brands' travel agent relationships, each of our brands' marketing programs are
generally independent of each of our other brands. In each of our principal
markets, we have familiarized the travel agency community with our cruise brands
and products.
Travel agents generally receive standard commissions of 10%, plus the
potential of additional commissions based on sales volume. During fiscal 2006,
no controlled group of travel agencies accounted for more than 10% of our
revenues.
Our investment in customer service has been focused onincludes the development of systemsemployees and employees.systems. We have improvedcontinually improve our systems within the reservations and customer relationship management functions, emphasizing the continuedcontinuing support of the travel agency community, while simultaneously developing greater contact and interactivity with our customerhigh-value guest base. Each brand has its own website, which provides access to information about our products to users throughout the world, and substantially all provide booking engines to our travel partners and to our customers.customers to enable them to more efficiently book our cruises, shore excursions and, in some cases, other onboard activities. We also support booking capabilities through major airline computer
reservationglobal distribution systems, including SABRE, Galileo, Amadeus, Travelport and Worldspan.SABRE. Although the vast majority of our cruises are distributed through travel agents, we also takeaccept telephone and internet bookings direct from customers who choose not to utilizecontact us directly. Finally, as part of our effort to improve the servicesembarkation process for our guests, as well as increase our efficiency, most of a travel agent.
Weour brands offer their guests the ability to generate their own electronic ticket documents via their websites.
As part of the management of our customer relationships, we have pursued comprehensive marketing and advertising campaigns to marketpromote our brands to vacationers including direct response marketing.and our travel agent partners. The principal media used for marketing and advertising are television, magazine, newspaperradio, online, outdoor, direct mail, e-mail, blogs, online journals and radio advertisementssocial media. More recently, there has been a shift from print media to online (display and promotional
campaigns. search) and social media (e.g., Facebook, YouTube, Twitter, Flickr and Podcasts) that help us engage in two-way conversations with consumers, creates brand advocates and provides real-time feedback in terms of brand and product perceptions. Blogs and online journals are a useful way for us to disseminate information. Crew blogs are written by ship captains, cruise and entertainment directors, executive pursers and special guests. Newbuild sites are devoted to key milestones for ships, such as Holland America Line’sNieuw Amsterdam. Cruise line communities, such as AIDA’s Web Lounge and The World of Costa, are a way for guests to connect through a shared interest in a particular brand. For example, the blog of Carnival Cruise Lines’ Senior Cruise Director, John Heald, has attracted over 5.5 million visits since being launched two years ago and Carnival Cruise Lines’ website receives more visits per month than any other cruise company website, based on Hitwise analysis, a leading independent online measurement provider. In addition, our brands have accumulated a database containing information on about 50 million past guests and prospects that we believe we can utilize to more efficiently and effectively market our products.
20
To further stimulate demand, we have also been offering more home port
locations, which enableoffer a number of homeports that are closer to guests’ homes as this enables certain guests to lower the price of their cruise vacation by substantially reducing or eliminating the cost of air travel to and from the port.
In addition, in both the UK and Australia we have formed a sales alliance known as the "Complete“Complete Cruise Solution,"” whereby our UK and Australian sales forces and back-office operations are able to provide their customerstravel agents with one-stop cruise shopping for a number of our brands. Finally,In North America and the UK, we have
establishedalso raise consumer and travel agent awareness through the World's“World’s Leading Cruise Lines ("WLCL") allianceLines” alliances for our familyfamilies of North American and UK cruise brands and Costa in order both to educate the consumer
about the overall breadthbrands. Finally, most of our cruise brands offer their own past guest recognition programs, such as well as to increase the
effectiveness and efficiency of marketing our brands. As part of this alliance,
we offer Vacation Interchange Privileges,Princess’ “Captain’s Circle”, Costa’s “CostaClub” or Holland America Line’s “Mariner Society,” through which is a loyalty program that
provides special considerations tothey reward repeat guests aboard the WLCL brands.
XIII. Seasonality
with special incentives such as discounted fares, expedited ship embarkation and disembarkation and onboard activities.
XIV. | Seasonality |
Our revenues from the sale of passenger tickets are seasonal. Historically, demand for cruises has been greatest during our third fiscal quarter, which includes the Northern Hemisphere summer months. This higher demand during the third quarter results in higher net revenue yields and, accordingly, the largest share of our net income is earned during this period. The seasonality of our results is also increased due to ships being taken out of service for maintenance, which we typically schedule during non-peak demand periods. In addition, substantially all of Holland America Tours' and Princess Tours'Alaska Tours’ revenues and net income areis generated from May through September in conjunction with the Alaska cruise season.
15
XIV. Competition
XV. | Competition |
We compete with land-based vacation alternatives throughout the world, including, among others, hotels, resorts (including all-inclusives), theme parks, organized tours, land-based casino operations and vacation ownership properties located in Las Vegas, Nevada, and
Orlando, Florida, the Caribbean (including the Bahamas), France, Dubai, Canary Islands and various Caribbean,Mediterranean, Mexican, Bahamian and Hawaiian Island destinations, andas well as numerous other vacation choices throughout Europe and the rest
of the world.
Our primary cruise competitors for contemporary and premium North American-sourced passengersguests are Royal Caribbean Cruises Ltd.,RCCL, which owns Royal Caribbean International and(“RCI”), Celebrity Cruises Star Cruises Limited, which owns
NCL Corporation Ltd., which is comprised of(“Celebrity”) and Azamara Club Cruises; Norwegian Cruise Line NCL America(“NCL”), Oceania Cruises and Orient Lines,Regent Seven Seas Cruises, all three of which are controlled by Apollo Management LP; Disney Cruise Line Mediterranean Shipping Company, which owns(“Disney”), MSC Cruises (“MSC”), Crystal Cruises, Silversea Cruises and CrystalWindstar Cruises.
Our primary cruise competitors for European-sourced passengersguests in the UK are Royal Caribbean International, Island Cruises, Fred Olsen Cruise Lines,
Discovery Cruises, Saga Cruises, andRCI, Celebrity, NCL, MSC, Thomson Cruises, which is owned by TUI; in
Germany they are MSC Cruises, Hapag-Lloyd, which is owned by TUI Peter
Deilmann, Phoenix ReisenAG (“TUI”); Fred Olsen Cruise Lines and TransoceanSaga Cruises; and in Southerncontinental Europe they are MSC, Cruises, Louis Cruise Line, and CDF Croisieres de France, Pullmantur and RCI, all three owned by RCCL; TUI Cruises, which is jointly owned by Royal Caribbean
Cruises Ltd.,RCCL and Iberojet.TUI; Hapag-Lloyd, which is also owned by TUI; and Phoenix Reisen. We also compete for passengersguests throughout Europe with other North American cruise competitors, including Celebrity, Cruises, Norwegian Cruise LineDisney and Orient Lines.
NCL.
Our primary cruise competitors for our Seabournguests sourced from other parts of the world, such as Australia, New Zealand, Asia and Windstar luxury brands
include Regent Seven SeasSouth America, are RCI, Celebrity, Pullmantur, Star Cruises, Seadream Yacht ClubNCL, CVC Cruise and Silversea Cruises.
MSC.
Our North American, European and Australian brands also compete among themselves for passengers.
XV. Governmental Regulations
A. Maritime Regulations
guests.
21
XVI. | Governmental Regulations |
a. | Maritime Regulations |
1. | General |
Our ships are regulated by various international, national, state and local laws, regulations and treaties in force in the jurisdictions in which our ships operate. In addition, ourOur ships, which are registered in the Bahamas, Bermuda, Italy, the Marshall Islands, the Netherlands, Panama, Portugal and the UK, and,
accordingly, are regulated by these jurisdictions and byare required to comply with the international conventions that govern the safety and environmental impact of our ships, guests and crew members.and the protection of the environment. Each country of registry conducts periodic inspections to verify compliance with these regulations as discussed more fully below. In addition, the directives and regulations of the European Union (“EU”), the U.S. and the many other international ports that our ships visit are applicableapply to some aspects of our ship operations.
Specifically,
Our ships are subject to annual, intermediate, dry-docking and class renewal surveys by ship classification societies. These surveys ensure that our ships comply with international conventions adopted by the countries of registry and domestic rules and regulations, and verify that our ships have been maintained in accordance with the rules of the classification society and that recommended repairs have been satisfactorily completed.
Our ships are subject to inspection by the port regulatory authorities in the various countries that they visit. Such inspections include verification of compliance with the maritime safety, security, environmental, customs, immigration, health and labor regulations applicable to each port. For example, in U.S. ports these authorities include the U.S. Coast Guard and U.S. Customs and Border Protection. In EU ports, the Paris Memorandum of Understanding enforces internationally accepted conventions through Port State Control Inspections by 27 Marine Administrations. In UK ports, these authorities include the Maritime & Coastguard Agency, TRANSEC and the Port Health Authority.
We believe maritime safety, security, environmental, health and labor issues will continue to be areas of focus by relevant government authorities in the U.S., the EU and elsewhere where our cruise ships operate. Legislation, regulations or treaties, or changes thereto, in these areas could impact our operations and have and will likely subject us to increasing compliance costs in the future.
2. | Maritime Safety Regulations |
The International Maritime Organization sometimes referred
to as the "IMO"(“IMO”), which operates under the auspicesa specialized agency of the United Nations, has adopted safety standards as part of the International Convention for Safety of Life at Sea sometimes referred to as SOLAS,(“SOLAS”), which is applicableapply to all of our ships. Among other things, SOLAS establishes requirements for vessel design, structural features, materials, construction, life saving equipment, safe management and operation and security in order to help ensure passengerguest and crew safety and security. The SOLAS requirements are periodically revised from timefor both new and existing ships. One significant set of modifications entered into force in 2010 that requires all existing passenger ships to time,comply with the most recent modifications being phased-in through 2010.
current standards regarding fire safety. Our existing fleet is compliant with these 2010 requirements.
In 1993, SOLAS was amended to incorporate the International Safety Management Code referred to as the "ISM Code." The (“ISM CodeCode”), which provides an international standard for the safe management and operation of ships and for pollution prevention. The ISM Code is mandatory for passenger vessel operators. All of our operations and ships have obtainedare regularly audited by national authorities and maintain the required certificates demonstratingof compliance with the ISM Code and are regularly inspected and
controlled by the national authorities, as well as the internationalCode. National authorities, acting under the provisions of the international agreements related to Port State Control, the process by which a nation exercises authority over foreignregularly inspect our ships when the shipsthey are in that nation'snation’s waters.
In December 2004, the IMO’s Maritime Safety Committee approved for adoption
amendments toamended SOLAS chapter II-I Parts A & B that relaterequirements related to the damage stability of new passenger cruise passenger vessels. These regulations, which were adopted in May 2005, and
are applicableapply to those vessels whose keels arewere laid after January 1, 2009.
Although the new standards2009, and thus do not affect our existing fleet or our vessels currently under contract whosecontract. For vessels with keels will have been laid prior toafter January 1, 2009, compliance with these standards for ships whose keels are subsequently
laid will require the development of new designs,designs. The Maritime Safety Committee also amended SOLAS to require new passenger cruise vessels whose keels are laid after July 1, 2010, to comply with the “safe return to port” requirements, which relate to the development of vessel survivability standards, and will increase costs.
16
The most important convention regulating and preventing marine pollution
by shipsalso require the development of new ship designs. Compliance with both these regulations is the IMO International Convention for the Prevention of Pollution
from Ships ("MARPOL"), as amended. This convention appliesnot expected to all of our ships
and covers accidental and operational oil pollution as well as pollution by
various items including, but not limited to, sewage, garbage and air emissions.
result in significant cost increases.
22
3. | Maritime Security Regulations |
Our ships are subject to a program of periodic inspection by ship
classification societies who conduct annual, intermediate, dry-docking and class
renewal surveys. Classification societies conduct these surveys not only to
ensure that our ships are in compliance with international conventions adopted
by their respective country of registry and domestic rules and regulations, but
also to verify that our ships have been maintained in accordance with the rules
of the society and that recommended repairs have been satisfactorily completed.
Our ships that call at U.S. ports are subject to inspection by the U.S.
Coast Guard for compliance with SOLAS, by the U.S. Public Health Service for
sanitary standards, and by other agencies such as U.S. Customs and Border
Protection, with regard to customs and immigration. Our ships are also subject
to similar inspections pursuant to the laws and regulations of various other
countries our ships visit.
Finally, our ships are also subject to various security requirements,
primarily including the International Ship and Port Facility Security Code ("(“ISPS Code"Code”), which is part of SOLAS. Among other things, the ISPS Code requires vessel owners to implement security measures, conduct vessel security assessments, and develop security plans. Under these requirements, we have prepared and submitted security plans for all our ships to their respective countrycountries of registry, and International Ship Security Certificates have been issued demonstrating compliance with the ISPS Code. For ships that are
registered in the
The U.S. or have operations located in the U.S. the Maritime Transportation Security Act of 2002 ("MTSA"(“MTSA”) is the governing regulation. Theregulation for ships that operate in U.S. ports. MTSA establishes Area Maritime Security requirements for geographic port areas that provide authority for the U.S. Coast Guard to implement operational and physical security measures on a port area basis that could affect our operation in those areas.
In 2006, the International Labour Organization ("ILO"), adopted a new
Consolidated Maritime Labour Convention (the "Convention"). The ILO is also an
agency of the United Nations that develops worldwide employment standards. There
have been over 60 maritime labor conventions and recommendations developed since
1920 in areas such as minimum age of seafarers, medical certificates,
recruitment practices, health and welfare, hours of work, and social security.
The Convention is a comprehensive instrument that consolidates all of the
existing standards and recommendations into one instrument to reflect modern
conditions and language that will govern all aspects of crew management for all
ships in international commerce. While many of the practices, were widely
adhered to by ships registered in different countries, this consolidated
Convention will place additional requirements on shipowners not previously in
effect. Thirty member countries representing 33% of the world's merchant ship
tonnage will be required to ratify the Convention before it goes into effect 12
months after such ratification. We currently expect the Convention to be
effective for our ships in 2010 based on an expected European Unions ("EU")
ratification in 2008 or early 2009. Accordingly, if ratified, the Convention may
increase our 2010 and subsequent crew costs.
We believe that health, environmental, safety and security issues will
continue to be an area of focus by relevant government authorities in the U.S.,
the European Union and elsewhere. Resulting legislation or regulations, or
changes in existing legislation or regulations, could impact our operations and
would likely subject us to increasing compliance costs in the future.
B. Permits for Glacier Bay, Alaska
In connection with certain of our Alaska cruise operations, Holland
America Line, Princess Cruises and Carnival Cruise Lines rely on concession
permits from the U.S. National Park Service to operate their cruise ships in
Glacier Bay National Park and Preserve. Such permits must be periodically
renewed and we cannot be certain that they will continue to be renewed or that
regulations relating to the renewal of such permits, including preference or
historical rights, will remain unchanged in the future.
17
C. Alaska Environmental Regulations
The State of Alaska enacted legislation which prohibits certain discharges
in designated Alaska waters, ports or near shorelines and requires that certain
discharges be monitored to verify compliance with the standards established by
the legislation. Both the state and federal environmental regime in Alaska is
more stringent than the federal regime under the Federal Water Pollution Control
Act with regard to discharge from vessels. The legislation also provides that
repeat violators of the regulations could be prohibited from operating in
Alaskan waters.
D. Other Environmental, Health and Safety Matters
4. | Maritime Environmental Regulations |
We are subject to variousnumerous international, national, state and local environmental protection and health and safety laws, regulations and treaties that govern, among other things, air emissions, employee health and safety,
waste discharge, water management and disposal, and the storage, handling, use and disposal of hazardous substances, such as chemicals, solvents, paints and asbestos. We are committed to helping to conservepreserve the natural environment, not only because of the existing regulations,legal requirements, but because a pristine environment is one of the key elements that bring our guests on board our ships.
If we violate or fail to comply with environmental legislation, regulations or treaties, we could be fined or otherwise sanctioned by regulators. We have made, and will continue to make, capital and other expenditures to comply with environmental legislation, regulations and treaties.
See Part I, Item 1A. “Risk Factors.” for additional discussion of our environmental risks.
i. | International Regulations |
The most important environmental convention governing ships is the IMO International Convention for the Prevention of Pollution from Ships (“MARPOL”). This convention applies to all of our ships and includes requirements designed to prevent and minimize both accidental and operational pollution by oil, sewage, garbage and air emissions. All of our ships must carry an International Oil Pollution Prevention Certificate, an International Sewage Pollution Prevention Certificate, and an International Air Pollution Prevention Certificate. These certificates are issued by the ship’s state of registry indicating that our ships are operating in compliance with the MARPOL regulations regarding oil, sewage and air pollution prevention.
Many countries have ratified and adopted IMO Conventions which, among other things, impose liability for pollution damage, subject to defenses and to monetary limits, which monetary limits do not apply where the spill is caused by the owner’s actual fault or by the owner’s intentional or reckless conduct. In particular,jurisdictions that have not adopted the IMO Conventions, various national, regional or local laws and regulations have been established to address oil and waste pollution.
The International Organization for Standardization (“ISO”) is an international standard-setting body which produces worldwide industrial and commercial standards. ISO 14001, an environmental management standard that was developed to help organizations manage their processes, products and services to minimize environmental impacts, presents a structured approach to setting environmental objectives and targets. It provides a framework for any organization to apply these broad conceptual tools to their own processes. During 2006, we completed corporate-wide implementation of ISO 14001. The environmental management systems of all of our cruise brands are certified in accordance with ISO 14001, with the exception of Ibero, which became fully owned in July 2009. Ibero is currently developing plans to certify its environmental management systems in the near term.
23
ii. | U.S. Federal and State Regulations |
The U.S., the Act to Prevent Pollution from Ships, implementing the MARPOL convention, provides for severe civil and criminal penalties related to ship-generated pollution for incidents in U.S. waters within three nautical miles and in some cases in the 200-mile exclusive economic zone.
Furthermore, in the
The U.S., the Oil Pollution Act of 1990 (the "OPA"“OPA 90”) provides for strict liability for water pollution, such as oil pollution or threatenedpossible oil pollution incidents in the 200-mile exclusive economic zone of the U.S., subject to defined monetary limits. These monetary limits do not apply,
however, where the discharge is proximately caused by the gross negligence or
willful misconduct or the violation of an applicable safety, construction, or
operating regulation by a responsible party; or the responsible party fails or
refuses to: report the incident as required by law, provide all reasonable
cooperation and assistance in connection with removal operations, or without
sufficient cause, comply with an order issued by the federal on-scene
coordinator. Pursuant to the OPA 90 requires that, in order for us to operate in U.S. waters, we are also required tomust obtain Certificates of Financial Responsibility from the U.S. Coast Guard for each of our ships operating therein.in U.S. waters. These certificates demonstrate our ability to meet the maximum amount of liability that our ships could be subject to for removal costs and damages related to water pollution, such as forfrom an oil spill or a release of a hazardous substance, up to our ship'seach ship’s statutory liability limit. In addition, mostOur financial responsibility under these certificates is supported by certain of our insurers who provide guarantees aggregating $1.1 billion.
Most U.S. states that border a navigable waterways or seacoasts have also enacted environmental pollution lawsregulations that impose strict liability
on a person for removal costs and damages resulting from a discharge of oil or a release of a hazardous substance. These laws may be more stringent than U.S. federal law and in some cases have no statutory limits of liability.
Furthermore, many countries have ratified
In connection with certain of our Alaska cruise operations, Holland America Line, Princess and Carnival Cruise Lines rely on concession permits from the U.S. National Park Service (“NPS”) to operate their cruise ships in Glacier Bay National Park and Preserve. Such permits must be periodically renewed. We cannot be certain that they will continue to be renewed or that regulations relating to the renewal of such permits, including preference or historical rights, will remain unchanged in the future. In January 2009, the NPS renewed our permits through the 2019 Alaska cruise season.
The state of Alaska enacted legislation which prohibits certain discharges in designated Alaskan waters, ports or near shorelines and requires that certain discharges be monitored to verify compliance with the standards established by the legislation. Both the state and federal environmental regimes in Alaska are more stringent than the federal regime under the Federal Water Pollution Control Act with regard to discharge from vessels. The legislation also provides that repeat violators of the regulations could be prohibited from operating in Alaskan waters.
iii. | EU Regulations |
In the past 30 years the EU has adopted IMO Conventions
which, among other things, imposea substantial and diverse range of environmental measures aimed at improving the quality of the environment for European citizens and providing them with a high quality of life. To support the implementation and enforcement of Community environmental legislation, the Community has adopted directives on environmental liability and enforcement and a recommendation providing for pollution damage, subjectminimum criteria for environmental inspections.
In November 2002, the European Commission adopted a European Union strategy to defensesreduce atmospheric emissions from seagoing ships. The strategy reports on the magnitude and impact of ship emissions in the EU and sets out a number of actions to reduce ship emissions. The EU strategy seeks to implement the Sulfur Oxide (“SOx”) Emission Control Areas set out in MARPOL Annex VI, and to monetary limits, which monetary limits do not apply wherepress for tighter Nitrogen Oxide (“NOx”) standards. The Commission also urges Member States to ratify MARPOL Annex VI.
The EU continues to pursue an aggressive policy towards environmental protection and we can expect to see legislation being implemented in the spill is caused bynear future related to waste water discharges in the owner's actual fault or by the owner's intentional or
reckless conduct. In jurisdictions that have not adopted the IMO Conventions,
various national, regional or local lawsBaltic Sea and regulations have been established
to address oil pollution.
greenhouse gas reduction.
iv. | Low Sulfur Fuel Regulations |
Limitations on the sulphursulfur content of fuel are part of new regulations approved by the International Convention for the Preventionas part of Pollution from
Ships Annex VI ("MARPOL Annex VI"). Ships must carry an International Air
Pollution Prevention Certificate issued by its flag state indicating that it is
operating in compliance with MARPOL Annex VI. These certificates are required to
be issued during the three-year period ending in May 2008. Among other things,
MARPOL Annex VI establishes a limit on the sulphur content of fuel oil and calls on the IMO to monitor the worldwide average sulphursulfur content of fuel oil supplied for use aboard vessels.
In addition,2008, MARPOL Annex VI provideswas amended to require additional reductions in sulfur emissions by reducing the sulfur content requirements for special "Soxfuel oil. As part of these new requirements, the concept of Emission Control Areas" to beAreas (“ECAs”) was established with more stringentstricter limitations on sulphur emissions. Compliance with MARPOLsulfur emissions in these areas. Currently there are two ECAs in operation,
24
one in the Baltic Sea and the other European Union ("EU")
regulations may increase our operating costs, includingin the cost of fuel,
beginning in November 2007 forNorth Sea/English Channel. Specifically, from July 1, 2010, ships operating in ECAs will have to reduce their fuel sulfur content from the North Seacurrent 1.5% to 1.0%, and from January 1, 2015 and thereafter it will be further reduced to 0.1%. Compliance with these requirements in the English
Channel. Furtherexisting ECAs has increased our fuel costs and, beginning July 1, 2010 will further increase our fuel costs, however, we do not expect that this increase will be significant.
On January 1, 2010, an EU regulations regardingdirective became effective that requires the use of low sulphur0.1% sulfur content in all marine fuels used while ships are at berth or anchored in EU ports. This requires the use of distillate fuels, such as marine gas oil, further increasing fuel on
passenger ships on regular service to or from EU ports has recently been
introduced. Our current understanding is that these EU regulations do not apply
to cruise ships, however, we cannot be certain that our understanding is
correct.
18
If we violate or fail to comply with environmental laws, regulations or
treaties, we could be fined or otherwise sanctioned by regulators. We have made,
and will continue to make, capital and other expenditures to comply with
environmental laws and regulations.
The International Organization for Standardization ("ISO") is an
international standard-setting body, which produces worldwide industrial and
commercial standards. ISO 14001 is one of the series of ISO 14000 environmental
management standards that were developed to help organizations manage their
processes, products and services to minimize environmental impacts. ISO 14001
presents a structured approach to setting environmental objectives and targets,
and provides a framework for any organization to apply these broad conceptual
tools to their own processes. During 2006, we completed our corporate-wide
implementation and received certification of our ISO 14001 Environmental
Management System at all our ship operating companies.
In December 2006 the Maritime Safety Committee, which is the safety body
at the IMO, approved the adoption of amendments to SOLAS Ch II-2 that relate to
passenger ship balconies. These regulations will enter into force on July 1,
2008 and impose stricter limits on combustible materials and apply to both new
and existing ships. As of February 12, 2007, we anticipate that all our ships
including recent newbuild contracts, those currently under construction and our
existing ships will meet these requirements.
In addition, there are a number of safety related amendments that will
enter into force in July 2010 many of which are already being incorporated into
our current newbuilds. These include requirements for safety centers, emergency
cabin lighting, local sounding audible alarms, and amendments to fire detection
systems. Finally, the enhanced safe return to port requirements also enter into
force for keels laid after July 2010. Our current newbuilds meet existing
requirements, and do not need to comply with these new standards, but future new
designs are being developed that will meet these new requirements.
From time to time, environmental, health and safety regulators consider
more stringent regulations which may affect our operations and increase our
compliance costs. As evidenced from certain of the preceding paragraphs, the
cruise industry is affected by a substantial amount of environmental rules and
regulations. We believe thatHowever, the impact of cruise ships on the global
environment will continuecompliance with this directive is not expected to be significant.
Global sulfur fuel content limits are currently 4.5% and are required to be reduced by these 2008 MARPOL regulations to 3.5% by January 1, 2012, which will not have a significant impact on our fuel costs.
The U.S. and Canada have applied to the IMO for an areaECA out to 200 nautical miles on their east, west and gulf coasts, as well as the Hawaiian Islands, all of focuswhich could be in force by 2012. Additional ECAs may also be established in the relevant authoritiesfuture, such as for areas around the Bahamas, Mexico, Norway and in the Mediterranean. Compliance in this proposed U.S. and Canadian ECA with the 1.0% low sulfur content requirement will increase our fuel costs in 2012 and beyond. Based on current itineraries, fuel prices and technologies and our 2010 capacities and fuel consumption, we estimate that the implementation of the proposed U.S. and Canadian ECA would increase our annual fuel costs by approximately $50 million to $70 million.
Commencing in 2015, based on current itineraries, fuel prices and technologies and our estimated 2010 capacities and fuel consumption, we estimate that the implementation of the 0.1% low sulfur content requirement in the two existing ECAs and the proposed U.S. and Canadian ECA would additionally increase our annual fuel costs by approximately $100 million to $130 million.
Global sulfur fuel content limits, excluding the ECA limits that will remain at 0.1%, will be reduced to 0.5% by January 1, 2020, subject to a feasibility review to be completed no later than 2018. If this reduction is implemented in 2020 it will significantly increase our fuel costs. However, the amount of such increases in 2020 and thereafter is not reasonably determinable at this time, given the length of time until such possible implementation date and other mitigating factors discussed below.
The cost impacts from implementing progressively lower sulfur content requirements globally and in ECAs may be mitigated by, among other things, the favorable impact of future changes in the supply and demand balance for marine and other fuels, future developments of and investments in sulfur emission abatement and propulsion technologies, including more advanced engines and enhanced exhaust gas treatment systems, and new fuel conservation initiatives.
5. | Maritime Health Regulations |
We are committed to providing a healthy environment for all of our guests and crew. We voluntarily work with public health agencies throughout the world to monitor health and accordingly, this will likely subject us to increasing
compliance costssanitary conditions on all of our ships. As an example, for ships visiting U.S. ports we collaborate with the Centers for Disease Control and Prevention (“CDC”) - Vessel Sanitation Program of the Department of Health and Human Services. The CDC established the Vessel Sanitation Program (“VSP”) in the future.
early 1970s as a cooperative activity with the cruise industry.
We maintain frequent communication with the appropriate public health authorities and, as required, proactively report any communicable illnesses that are of public health concern. Through our collaborative efforts we work with the authorities to develop and revise guidelines, review plans and conduct on-site inspections for all newbuilds and significant existing ship renovations. In addition, we continue to maintain our ships by meeting, and often exceeding, applicable public health guidelines and requirements, complying with inspections, and conducting crew training and guest education programs regularly throughout the life of the ship.
See Part 1, Item 1A. "Risk Factors"“Maritime Labor Regulations” below for additional discussion of health regulations.
25
6. | Maritime Labor Regulations |
In 2006, the International Labour Organization (“ILO”), an agency of the United Nations that develops and oversees international labor standards, adopted a new Consolidated Maritime Labour Convention (“MLC 2006”). MLC 2006 contains a comprehensive set of global standards based on those that are already found in 68 maritime labor Conventions and Recommendations adopted by the ILO since 1920. It brings almost all of these Conventions and Recommendations together in a single new Convention that uses a new format with some updating, where necessary, to reflect modern conditions and language. MLC 2006 includes a broad range of requirements in areas such as the definition of a seafarer, minimum age of seafarers, medical certificates, recruitment practices, training, repatriation, recreational facilities, health and welfare, hours of work and rest, accommodations and wages and entitlements. While many of the practices were widely adhered to by ships registered in different countries, MLC 2006 will add requirements not previously in effect, particularly in the area of occupational safety and health. The detailed requirements of MLC 2006 directly address many seafarers’ issues and, therefore, if effectively implemented will provide worldwide standards to improve the health, safety and status of seafarers.
Thirty member countries representing 33% of the world’s merchant ship tonnage are required to ratify the MLC 2006 before it goes into effect 12 months after such ratification. We currently expect ratification in late 2010, and entry into force, requiring our environmental risks.
E. Consumer Regulations
implementation in late 2011 or early 2012. Implementation may increase our crew and newbuilding costs. However, the amount of such increase is not determinable at this time since the enacting countries’ legislation has not yet been published to enable us to determine the impact of compliance.
b. | Consumer Regulations |
Our ships that call on U.S. ports are regulated by the Federal Maritime Commission referred to as the "FMC"(“FMC”). Public Law 89-777, which is administered by the FMC, requires most cruise line operators who embark guests in U.S. ports to establish financial responsibility for their liability to passengers for non-performance of transportation, as well as casualtyfor personal injury and personal injury.for loss of life. The FMC'sFMC’s regulations require that a cruise line demonstrate its financial responsibility for non-performance of transportation through a guarantee, escrow arrangement, surety bond or insurance. Currently, the amount required must equal 110% of the cruise line'sline’s highest amount of customer deposits over a two-year period, up to a maximum coverage level of $15 million. See Part 1, Item 1. Business, E. -
"Insurance - Other Insurance"In order to comply with this requirement, we have an aggregate of $90 million of guarantees provided by some of our insurers. Our Protection and Indemnity (“P&I”) coverages are used to establish our financial responsibility for additional discussion.
personal injury and loss of life.
In the UK, in some cases we are currently required to bond and obtain licenses from and post bonds with various organizations in connection with the conduct of our business and our ability to meet liabilityour liabilities in the event of non-performance of obligations to consumers. These organizations include the Passenger Shipping Association and the Civil
Aviation Authority. See Part 1, Item 1. Business, E. - "Insurance-Other
Insurance" for additional discussion.
The most significant requirement relates to Abta, which requires us to maintain approximately $130 million of sterling-denominated bonds to cover our brands’ UK passenger deposit liabilities.
We are also required by German and French law to obtain a guarantee from a reputable insurance company to ensure that, in case of insolvency, our customers will be refunded any monies they have paid on account of a booking and, in addition, that they will be repatriated without additional cost if insolvency occurs after a cruise starts. In addition,Additionally, in Australia we are a member of the Travel Compensation Fund which provides compensation, as a last resort, to consumers who suffer losses in their dealings with travel agents. Finally, other jurisdictions including Argentina and Brazil,may require the establishment of financial responsibility for passengers from their jurisdictions.
19
We believe we have all material licenses to conduct our business. From
time to time, various other regulatory and legislative changes may be proposed
or adopted that could have an effect on the cruise industry, in general, and our
business, in particular. See Part I, Item 1A. "Risk Factors" for a discussion of
other regulations which impact us.
XVI. Financial Information
XVII. | Financial Information |
For financial information about our cruise reporting segment and geographic information with respect to each of the three years in the period ended November 30, 2006,2009, see Note 11, "Segment Information"“Segment Information” to our Consolidated Financial Statements in Exhibit 13 to this joint Annual Report on Form 10-K.
C. Employees
C. | Employees |
Our shoreside operations have approximately 10,10010,600 full-time and 4,6004,200 part-time/seasonal employees. We also employ approximately 60,00070,000 crew, including officers, crew
and staff onboard our 8193 ships at any one time. Due to the highly seasonal nature of our Alaskan and Canadian operations, Holland America Princess Alaska Tours and
Princess Tours increase theirincreases its work force during
26
the late spring and summer months in connection with the Alaskan cruise season, employing additional seasonal personnel, which have been included above. We have entered into agreements with unions covering certain employees in our hotel, transportation and shipshipboard operations. We consider our employee and union relations generally to be good.
We source our shipboard officers primarily from Italy, the UK, Holland, Germany and Norway. The remaining crew positions are manned by persons from around the world. We utilize various manning agencies in many countries and regions to help secure our shipboard employees.
D. Suppliers
D. | Suppliers |
Our largest purchases are for fuel, travel agency services, fuel, advertising,
food and beverages, hotel and restaurant supplies and products, airfare, port facility utilization, repairs and maintenance, including dry-docking, port facility utilization,advertising and marketing, hotel and restaurant products and supplies, communication services and for the construction and refurbishment of our ships. Although we utilize a select number of suppliers for most of our food and beverages, communication services, air transportation services and hotel and restaurant suppliesproducts and products,supplies, most of these itemsproducts and services are available from numerousmultiple sources at competitive prices. The use of a select number of suppliers enables us to, among other things, obtain volume discounts. We purchase fuel and port facility services at some of our ports of call from a limited number of suppliers. In addition, we perform our major dry-dock and ship improvement work at a limited number of dry-dock facilities in Australia, the Bahamas, British Columbia, Canada, the Caribbean (including the Bahamas), Europe, Singapore, and the U.S. Finally, as of February 12, 2007,January 28, 2010, we have agreements in place for the construction of 2013 cruise ships bywith three shipyards. We believe there are sufficient dry-dock and shipbuilding facilities to meet our anticipated repair, maintenance, refurbishment and newbuild requirements.
E. Insurance
General
E. | Insurance |
I. | General |
We maintain insurance to cover a number of risks associated with owning and operating our vessels in international trade.and other non-ship related risks. All such insurance policies are subject to coverage limits, exclusions and deductible levels. Insurance premium increases are dependent on our own loss experience and the general premium requirements of our underwriters.insurers. We cannot be certain that affordable and viable direct and reinsurance markets will be available to us in the future. We maintain certain levels of self-insurance for all the below-mentioned risks,coverages, some of which have increased in recent years, and we may increase our self insuranceself-insurance levels further in the future to mitigate premium increases. We do not carry coverage related to loss of earnings or revenues forfrom our ships.
Protection and Indemnity ("P&I") Coverage
ships or other operations.
II. | P&I Coverages |
Third-party liabilities in connection with our cruise activities are covered by entry in P&I clubs, which are mutual indemnity associations owned by ship owners. Our vessels are entered in threetwo P&I clubs as follows: The West of
England Ship Owners Mutual Insuranceclubs; Standard Steamship Owners’ Protection and Indemnity Association (Luxembourg),(Europe) Ltd. and The Steamship Mutual Underwriting Association (Bermuda) Limited and the United Kingdom Mutual
Steam Ship Assurance Association (Bermuda) Limited. The P&I clubs in which we participate are part of a worldwide group of P&I clubs, known as the International Group of P&I Clubs (the "IG"“IG”). The IG insures directly, and through 20
world'sworld’s shipping fleets. Coverage is subject to the P&I clubs'clubs’ rules and the limit of coverage is determined by the IG. P&I coverage includes legal, statutory or pre-approved contract liabilities and other expenses related to crew, passengersguests and other third parties. This coverage also includes shipwreck removal, pollution and damage to third party property.
Hull and Machinery Insurance
III. | Hull and Machinery Insurance |
We maintain insurance on the hull and machinery of each of our ships in amounts equal to the estimated market value of each ship. The coverage for hull and machinery is provided by international marine insurance carriers.insurers. Most insurance underwritersinsurers make it a condition for insurance coverage that a ship be certified as "in class"“in class” by a classification society that is a member of the International Association of Classification Societies ("IACS"(“IACS”). All of our ships are currentlyhave been certified as in class with an IACS member. These certifications
have either been issued or endorsed within the last twelve months.
War Risk Insurance
months to be in class by an IACS member.
27
IV. | War Risk Insurance |
We maintain war risk insurance coverage for liability and physical damage,
subject to coverage limits and exclusions for claims such as those arising from
chemical, nuclear and biological attacks, on all of our ships covering our legal liability to crew, passengersguests and other third parties as well as loss or damage to our vessels arising from war or war-like actions, including terrorist risks.
Thisincidents. Items excluded from this coverage are claims arising from chemical, nuclear and biological attacks. War risk insurance coverage is provided by international marine insurers and Mutual War Risk Clubs. In addition, excess war risk insurance carriers.is provided by our two P&I clubs for all our ships. Under the terms of our war risk insurance coverage, which is typical for war risk policies in the marine industry, underwritersinsurers can give seven days notice to the insured that the liability and physical damage policies can be cancelled. In addition,However, the policy can be reinstated at different premium rates. This gives underwritersinsurers the ability to increase our premiums following events that they determine have increased their risk.
Other Insurance
As required by the FMC, we maintain performance bonds or bank guarantees
in the aggregate amount of $105 million for ships operated by our brands which
embark passengers in U.S. ports to cover passenger ticket liabilities in the
event of a cancelled or interrupted cruise.
V. | Other Insurance |
We also maintain other performance
bonds or guarantees as required by various U.S. and foreign authorities that
regulate certain of our operations in their jurisdictions; the most significant
of which are required by the UK Passenger Shipping Association and the UK Civil
Aviation Authority and total approximately L104 million ($203 million U.S.
dollars at November 30, 2006 exchange rate) and L52 million ($103 million U.S.
dollars at the November 30, 2006 exchange rate), respectively, to cover our
brands' UK passenger and air ticket deposit liabilities.
We maintainhave standard property and casualty insurance policies to covercoverage for certain shoreside assets and liabilities to third parties, including our tour business, shoreside and certain port facility assets, as well as appropriate workers'workers’ compensation policies.
The Athens Convention
Current conventions generally in force applying to passenger ships are the
Athens Convention relating to the Carriage of Passengers and their Luggage by
Sea (1974), the 1976 Protocol to the Athens Convention and the Convention on
Limitation of Liability for Maritime Claims (1976). The U.S. has not ratified
any Athens Convention Protocol. However, a vessel's flag state or the port state
that has ratified it may enforce the 1976 Athens Convention Protocol with regard
to vessels registered under its flag or visiting a port located in its
jurisdiction.
The IMO Diplomatic Conference agreed to a new protocol to the Athens
Convention on November 1, 2002. The new protocol, which has not yet been
ratified by the U.S. or any of our flag states, requires substantial levels of
compulsoryemployee health insurance which must be maintained by passenger ship operators and
provides a direct action provision, which will allow claimants to proceed
directly against insurers. This new protocol requires passenger ship operators
to maintain insurance or some other form of financial security, such as a
guarantee from a bank, to cover the limits of liability under the Athens
Convention with regards to the death or personal injury of passengers. The
timing of the ratification of this new protocol, if obtained at all, is
uncertain. We cannot be certain that affordable and viable direct and
reinsurance markets will be available to provide the level of coverage required
under the new protocol. If the new protocol is ratified, we expect insurance
costs would increase.
21
F. Trademarks and Other Intellectual Property
coverages.
F. | Trademarks and Other Intellectual Property |
We own and have registered or licensed, numerous trademarks and have also
registered various domain names, which we believe are widely recognized throughout the world and have considerable value. These intangible assets enable us to distinguish our cruise product, ships and programs from those of our competitors. Our trademarks include the trade names of our cruise lines, each of which we believe is a widely-recognized brand name in the cruise vacation industry, as well as "World's Leading Cruise Lines."our ship names and a wide variety of cruise services and products. We have entered into licenses, including a license to use the P&O name, the P&O flag and other relevant trademarks and domain names in relation to cruisescruising and related activities. Finally, weWe also have a license to use the "Love Boat"“Love Boat” name and related marks. See Note 2, "Trademarks"10, “Fair Value Measurements, Derivatives Instruments and Hedging Activities” to our Consolidated Financial Statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates – Asset Impairments” in Exhibit 13 to this joint Annual Report on Form 10-K.
G. Taxation
U.S. Federal Income Tax
10-K for additional discussion of our trademarks.
G. | Taxation |
I. | U.S. Federal Income Tax |
We are aprimarily foreign corporationcorporations engaged in the business of operating passenger vessels in international transportation. We also own and operate, among other businesses, the hotel, transportation and tour business of Holland America Princess Alaska Tours through U.S. corporations. See Part I, Item 1A. “Risk Factors.”
Our North American passenger vessel business and certain ship-owning subsidiaries are engaged in a trade or business inwithin the U.S.,
and our ship-owning subsidiaries are foreign corporations Depending on the itinerary of any particular vessel, that in many cases,
depending upon the itineraries of their ships, receivevessel may generate income from sources within the U.S. for U.S. federal income tax purposes. To the best of our
knowledge, weWe believe that under Section 883 of the Internal Revenue Code and applicable income tax treaties, 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 currently exempt from U.S. federal income tax. This exempt income does not include our U.S. source income, principally from the
transportation, hotel and tour businesses of Holland America Tours and Princess
Tours, and, beginning with the year ended November 30, 2005, the items listed in
the regulationsRegulations under Section 883 list items that the Internal Revenue Service (“IRS”) does not consider to be incidental to ship operations. Among the items that are
identified in the regulations as not incidental to ship operations are income from the sale of air transportation, shore excursions and pre- and post cruisepre-and post-cruise land packages deemed to bethe extent earned from sources within the United States. In addition,
duringU.S.
Our domestic U.S. operations, principally the last quarterhotel, transportation and tour business of 2005 and the first quarter of 2006, we chartered
three vessels to the Military Sealift Command in connection with the Hurricane
Katrina relief effort. Income from these charters is not considered to be income
from the international operation of our ships and, accordingly, income taxes
have been provided on the net earnings of these charters.
The following summary of the application of the principal U.S. federal
income tax laws to us is based upon existing U.S. federal income tax law,
including the Internal Revenue Code, proposed, temporary and final U.S. Treasury
regulations, certain current income tax treaties, administrative pronouncements
and judicial decisions, as currently in effect, all of whichHolland America Princess Alaska Tours, are subject to change, possibly with retroactive effect.
Application of Section 883 ofnormal state and federal income taxation in the Internal Revenue Code
U.S.
a. | Application of Section 883 of the Internal Revenue Code |
In general, under Section 883, certain non-U.S. corporations 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. Effective for our year ended November 30, 2005 and thereafter,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. and (ii) the foreign corporation meets thea defined publicly-traded test described below.test. In addition, to the extent a foreign corporation'scorporation’s shares are owned by a direct or indirect parent corporation which itself meets the publicly-traded test, then in analyzing the stock ownership test with respect to
such subsidiary stock owned directly or indirectly by such parent corporation will be deemed owned by individuals resident in the country of incorporation of such parent corporation.
A company whose shares are considered to be "primarilycorporation and regularly
traded on an established securities market"the subsidiary will satisfy the applicable stock ownership requirements in the U.S. or another qualifying
jurisdiction will meetlieu of the publicly-traded test (the "publicly-traded test").
Stock will be considered "primarily traded" on one or more established
securities markets if, with respect to each class of stock of the particular
corporation, the number of shares in each such class that are traded during a
taxable year on any such market exceeds the number of shares in each such class
traded during that year on any other established securities market. Stock of a
corporation will generally be considered "regularly traded" on one or more
established securities markets under the regulations if (i) one or more classes
of stock of the corporation that, in the aggregate, represent more than 50% of
the total combined voting power of all classes of stock of such corporation
entitled to vote and of the total value
22
of the stock of such corporation are listed on such market; and (ii) with
respect to each class relied on to meet the more than 50% requirement in (i)
above, (x) trades in each such class are effected, other than in de minimis
quantities, on such market on at least 60 days during the taxable year, and (y)
the aggregate number of shares in each such class of the stock that are traded
on such market during the taxable year is at least 10% of the average number of
shares of the stock outstanding in that class during the taxable year. A class
of stock that otherwise meets the requirements outlined in the preceding
sentence is not treated as meeting such requirements for a taxable year if, at
any time during the taxable year, one or more persons who own, actually or
constructively, at least 5% of the vote and value of the outstanding shares of
the class of stock, own, in the aggregate, 50% or more of the vote and value of
the outstanding shares of the class of stock (the "5% Override Rule"). However,
the 5% Override Rule does not apply (a) where the foreign corporation
establishes that qualified shareholders own sufficient shares of the
closely-held block of stock to preclude non-qualified shareholders of the
closely-held block of stock from owning 50% or more of the total value of the
class of stock for more than half of the taxable year; or (b) to shares of stock
owned by an investment company registered under the Investment Company Act of
1940.
test.
28
We believe that Panama is an equivalent exemption jurisdiction and Carnival Corporation currently qualifies as a publicly traded corporation under the regulations and substantially all of its income, with the exceptions noted above under “U.S. Federal Income Tax,” will continue to be exempt from U.S. federal income taxes. However, because various members of the Arison family and trusts
established for their benefit currently own approximately 37% of Carnival
Corporation shares, there is the potential that additional shareholders could
acquire 5% or more of its shares, which could result in Carnival Corporation
being considered closely held, and thus jeopardize its qualification as a
publicly traded corporation. If, in the future, Panama no longer qualified as an equivalent exemption jurisdiction or Carnival Corporation were to fail to qualify as a publicly traded corporation, it and all of its ship-owning or operating subsidiaries that rely on Section 883 for exempting cruise operations income would be subject to U.S. federal income tax on their U.S. source cruise operation income. In such event, the net income of Carnival Corporation'sCorporation’s ship-owning or operating subsidiaries would be materially reduced.
As a precautionary matter, Carnival Corporation amended its articles of
incorporation in fiscal 2000 to ensure that it would continue to qualify as a
publicly traded corporation under these regulations when they were originally
proposed. As applied to Carnival Corporation, the final regulations are
substantially the same as the proposed regulations. This amendment provides that
no one person or group of related persons, other than certain members of the
Arison family and trusts established for their benefit, may own or be deemed to
own by virtue of the attribution provisions of the Internal Revenue Code more
than 4.9% of Carnival Corporation shares, whether measured by vote, value or
number of shares, without the consent of Carnival Corporation's Board of
Directors. Unless Board consent is provided, any Carnival Corporation shares
acquired in violation of this provision will be transferred to a trust and, at
the direction of its board of directors, sold to a person whose shareholding
does not violate that provision. No profit for the purported transferee may be
realized from any such sale. In addition, under specified circumstances, the
trust may transfer the common stock at a loss to the purported transferee.
Because certain of Carnival Corporation notes are convertible into its shares,
the transfer of these notes are subject to similar restrictions. These transfer
restrictions may also have the effect of delaying or preventing a change in
control or other transactions in which the shareholders might receive a premium
for Carnival Corporation shares over the then prevailing market price or which
the shareholders might believe to be otherwise in their best interest.
Although the above represents our interpretation of this Internal Revenue Code provision and the U.S. Treasury regulations, the Internal Revenue Service'sIRS’s interpretation of these provisions could differ materially. In addition, the
provisions of the Internal Revenue Code including Section 883, are subject to change at any time by legislation. Moreover, changes could occur in the future with respect to the trading volume or trading frequency of Carnival Corporation shares or with respect to the identity, residence, or holdings of Carnival Corporation'sCorporation’s direct or indirect shareholders that could affect Carnival Corporation'sCorporation’s and its subsidiaries eligibility for the Section 883 exemption. Accordingly, although we believe it
is unlikely, it is possible that Carnival Corporation and its ship-owning or operating subsidiaries'subsidiaries’ whose tax exemption is based on Section 883 could lose this exemption. If Carnival Corporation and/or its ship-owning or operating subsidiaries were not entitled to the benefit of Section 883, Carnival Corporation and/or its ship-owning or operating subsidiaries would be subject to U.S. federal income and branch taxation on a portion of our income.
Exemption Under Applicable Income Tax Treaties
its income resulting in higher than normal tax rates.
b. | Exemption Under Applicable Income Tax Treaties |
We believe that the U.S. source shippingtransportation income fromearned by Carnival plc and its UK and Italian resident subsidiaries currently qualify for exemption from U.S. federal income tax
23
abrogatedrevoked by either applicable country, replaced or modified with new agreements that treat shipping income from international operation of ships differently than under the agreements currently in force. If any of our subsidiaries that currently claim exemption from U.S. income taxation on their U.S. source shipping income under an applicable treaty do not qualify for benefits under the existing treaties, or if the existing treaties are abrogated,revoked, replaced or materially modified in a manner adverse to our interests and, with respect to U.S. federal income tax only, if any such subsidiary does not qualify for exemption under Section 883, such ship-owning or operating subsidiary may be subject to U.S. federal income taxation on a portion of its income, which would
reduce our net income.
Taxation in the Absence of an Exemption under Section 883 or any
Applicable U.S. Income Tax Treaty
c. | Taxation in the Absence of an Exemption under Section 883 or any Applicable U.S. Income Tax Treaty |
Shipping income that is attributable to transportation of passengers which begins or ends in the U.S. is considered to be 50% derived from U.S. sources. Shipping income that is attributable to transportation of passengers which begins and ends in foreign countries is considered 100% derived from foreign sources. Shipping income that is attributable to the transportation of passengers which begins and ends in the U.S. without stopping at an intermediate foreign port is considered to be 100% derived from U.S. sources.
The legislative history of the transportation income source rules suggests that a cruise that begins and ends in a U.S. port, but that calls on more than one foreign port, will derive U.S. source income only from the first and last legs of the cruise. Because there are no regulations or other Internal Revenue
ServiceIRS interpretations of these rules, the applicability of the transportation income source rules in the aforesaid manner is not free from doubt.
In the absence of an exemption under Section 883 or any applicable U.S. income tax treaty, as appropriate, we and/or our subsidiaries would be subject to either the net income and branch profits tax regimes of Section 882 and Section 884 of the Internal Revenue Code (the "net(collectively the “net tax regime"regime”) or the four percent of gross income tax regime of Section 887 of the Internal Revenue Code (the "four“four percent tax regime"regime”).
29
Where the relevant foreign corporation has, or is considered to have, a fixed place of business in the U.S. that is involved in the earning of U.S. source shipping income and substantially all of this shipping income is attributable to regularly scheduled transportation, the net tax regime is applicable. If the foreign corporation does not have a fixed place of business in the U.S. or substantially all of its income is not derived from regularly scheduled transportation, the four percent tax regime will apply.
The net tax regime should be the tax regime applied to Carnival Corporation and its vessel owning subsidiaries based in the U.S. in the absence of an exemption under Section 883. Under the net tax regime, U.S. source shipping income, net of applicable deductions, would currently be subject to a federal corporate income tax of up to 35% and state income taxes at varying rates; and the net after-tax income would be potentially subject to a further branch tax of 30%. In addition, interest paid by the corporations, if any, would generally be subject to a branch interest tax.
The four percent tax regime should be the tax regime applicable to our vessel owning subsidiaries based outside the United States,U.S. in the absence of an exemption under Section 883 or any applicable U.S. income tax treaty. Under the four percent tax regime, gross U.S. source shipping income would be subject to a four percent tax, without the benefit of deductions.
UK Income Tax
II. | UK and Australian Income Tax |
Cunard, Ocean Village, P&O Cruises and P&O Cruises Australia and Swan
Hellenic have all elected to enter the UK tonnage tax regime. Companies to which the tonnage tax regime applies pay corporation tax on profit calculated by reference to the net tonnage of qualifying vessels. UK corporation tax is not chargeable under the normal UK tax rules on these brands' operatingbrands’ relevant shipping income. Relevant shipping income includes income from the operation of qualifying ships and from shipping related activities. It also includes dividends from foreign companies, which are subject to a tax on profits in their country of residence or elsewhere and the activities of which broadly would qualify in full for the UK tonnage tax regime if they were UK resident.
24
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. There is also a seafarer training requirement to which the UK tonnage tax companies are subject.
Our UK non-shipping activities that do not qualify under the UK tonnage tax regime, which are not currently or forecast to be significant, remain subject to normal UK corporation tax.
Italian and German Income Tax
In November 2004, the German brand
P&O Cruises Australia is a division of Carnival plc, AIDA, became a
division of Costa. Fromand the date ofshipping profit income from this change, AIDA's incomeoperation is subject to ItalianUK tonnage tax as discussed above. Substantially all of this operation’s income tax. The majority of the profits earned by our German brands areis exempt from GermanAustralian corporation taxes by virtue of the Italy/Germany doubleUK/Australian income tax treaty.
During the 2005 third quarter,
III. | Italian, German, Portuguese and Spanish Income Tax |
Carnival plc’s German and Spanish brands, AIDA and Ibero, are both subsidiaries of Costa. Effective through fiscal 2014, Costa elected to enteris entered into the Italian Tonnage Tax regime, effective for its 2005 fiscal year and for the following
nine years.regime. This regime taxes Costa'sCosta’s, AIDA’s and AIDA'sIbero’s shipping profits, as defined and which is mostsubstantially all of Costa's and AIDA'stheir income, calculated by reference to the net tonnage of itstheir qualifying vessels. However, most
Most of theCosta’s and AIDA’s income, and Ibero’s income through 2009, not considered to be shipping profits for Italian Tonnage Tax purposes, will be taxed under the Italian tax regime for CostaCosta’s, AIDA’s and AIDA'sIbero’s Italian-registered ships.
Australian Income Tax
P&O Cruises Australia is a division of Carnival plc, and the income from
this operation, is subject to UK tonnage tax as discussed above. The majority of this operation'sAIDA’s profits are exempt from AustralianGerman corporation taxes by virtue of the UK/AustralianItaly/Germany income tax treaty.
State Taxes
All of Ibero’s vessels are registered in Portugal. Provided certain local employment requirements are satisfied, beginning in 2010 most of Ibero’s income not considered to be shipping profits for Italian Tonnage Tax purposes will be exempt from Portuguese income tax through 2011 and thereafter and will be subject to a favorable Portuguese income tax regime at a lower than normal rate through 2020. Ibero’s Spanish operations are minimal and, therefore, its Spanish income taxes are minimal.
30
IV. | U.S. State Income Taxes |
In addition to the U.S. federal income and branch level taxes discussed above, Carnival Corporation &and Carnival plc and certain of its affiliates are subject to various U.S. state income taxes generally imposed on each statesstate’s portion of the U.S. source income subject to U.S. federal income taxes. In addition, in August, 2006However, the Statestate of Alaska passed Ballot Initiative
2 (the "Initiative") which, among other things, imposes aan income tax on cruise
passengers sailingits allocated portion of the total income of our companies doing business in Alaskan waters. The Initiative took effect at the
beginningAlaska and certain of 2007 and imposes a $46 per passenger tax on cruise passengers
aboard vessels with at least 250 berths, an additional fee of $4 per passenger
for an Ocean Ranger program, expands the amount of commercial passenger vessel
income that is subject to Alaska corporate state income taxes and assesses a 33%
tax on income from onboard gambling. The Initiative also imposes a number of
other regulations, reporting and operational requirements on cruise vessel
operators.
H. Website Access to Carnival Corporation & plc SEC Reports
We make available, free of charge, access to our joint Annual Report ontheir affiliates.
H. | Website Access to Carnival Corporation & plc SEC Reports |
Our Form 10-K, joint Quarterly Reports on Form 10-Q, joint Current Reports on Form 8-K, joint proxy statement related to our annual stockholders meeting, Section 16 filings and all amendments to those reports are available, free of charge on our home pages atwww.carnivalcorp.com andwww.carnivalplc.com and on the SEC’s home page atwww.sec.govas soon as reasonably practicable after such reports arewe have electronically filed with or furnished these reports with the SEC. The content of any website referred to the SEC through our home pages at www.carnivalcorp.com and
www.carnivalplc.com.
Item 1A. Risk Factors.
in this Form 10-K is not incorporated by reference into this Form 10-K unless expressly noted.
Item 1A. | Risk Factors. |
You should consider carefully the specific risk factors set forth below and the other information contained or incorporated by reference in this joint
Annual Report on Form 10-K, as these are important factors, among others, that could cause our actual results to differ from our expected or historical results. You should note that the risks describedlisted below are not the only risks we face. The risks listeddescribed below are only those risks relating to our operations and financial condition that we consider material. There may be additional risks, that we currently consider not to be material, or which we are not currently aware of, thatand any of these risks could have an adverse effect on our future results.the effects set forth above. Some of the statements in this section and elsewhere in this joint Annual Report on Form 10-K are "forward-looking“forward-looking statements."” For a discussion of those statements and of other factors to consider see the "Cautionary“Cautionary Note Concerning Factors That May Affect Future Results"Results” section below.
25
o General economic and business conditions may adversely impact the
levels of our potential vacationers' discretionary income and this
group's confidence in the U.S. economy and, consequently, reduce our
brands' net revenue yields and profitability.
• | General economic and business conditions, including fuel price increases, high unemployment rates, and declines in the securities, real estate and other markets, and perceptions of these conditions, may adversely impact the levels of our potential vacationers’ discretionary income and net worth and this group’s confidence in their country’s economy and, consequently, reduce our cruise brands’ net revenue yields and profitability. |
Demand for cruises is in part dependent on the underlying perceived or actual economic strength of the countries from which cruise companies source their passengers.guests. Adverse changes in the perceived or actual economic climate, such as higher fuel prices, higher unemployment rates, higher interest rates, stock, real estate and other market declines and volatility, more restrictive credit markets, higher taxes, and changes in governmental policies could reduce the discretionary income or consumer confidence in the countries from which we source our guests. Consequently this may negatively affect demand for vacations, including cruise vacations, which are a discretionary purchase. Decreases in demand could lead to price discounting which, in turn, could reduce the profitability of our business. o International politicalDecreases in discretionary income or consumer confidence could also result in lower onboard revenues, which could also have a negative effect on our profitability.
• | Fluctuations in foreign currency exchange rates could affect our financial results. |
We earn revenues, pay expenses, purchase and own assets, and incur liabilities in countries using currencies other world events affecting safetythan the U.S. dollar, most importantly the euro, sterling, the Australian dollar and security couldthe Canadian dollar. In fiscal 2009, we derived approximately 53% of our revenues from passengers sourced from countries outside of the U.S. Because our consolidated financial statements are presented in U.S. dollars, we must translate revenues and expenses, as well as assets and liabilities, into U.S. dollars at exchange rates in effect during or at the end of each reporting period. In addition, we must report currency transactions in the functional currencies of our reporting units. Therefore, fluctuations in foreign currency exchange rates, particularly the strengthening of the U.S. dollar against our other major currencies, will adversely affect the demand for cruises and could
harm our future sales and profitability.
U.S. dollar reported financial results.
31
• | The international political climate, armed conflicts, terrorist and pirate attacks and threats thereof, and other world events affecting the safety and security of travel could adversely affect the demand for cruises and could harm our future sales and profitability. |
Demand for cruises and other vacation options has been, and is expected to continue to be, affected by the public'spublic’s attitude towards the safety and security of travel. Events such as the terrorist attacks in the U.S. on September 11, 2001 and the threats of additional attacks in the U.S. and elsewhere, drug related violence in Mexico, concerns of an outbreak of additional hostilities and national government travel advisories, together with the resulting political instability and concerns over safety and security aspects of traveling, have had a significant adverse impact on demand and pricing in the travel and vacation industry in the past, and may continue to do sohave an adverse impact in the future. Decreases in demand could lead to price discounting which, in turn, could reduce the profitability of our business.
o We may lose business to competitors throughout the vacation market.
• | We may lose business to competitors throughout the vacation market, which could adversely affect our operations and financial condition. |
We face significant competition from other cruise lines, both on the basis of cruise pricing and also in terms of the types of ships, services and destinations we offerbeing offered to cruise passengers.guests. We try to differentiate ourselves from our cruise competitors by offering new itineraries, products and services to our guests, but the acceptance of each offering is not certain and consumers’ preferences are always subject to change. In addition, we may needchoose to enhance our older ships with currentinnovative amenities and improvements in order for those ships to be more competitive with other cruise ships. Our principal competitors include the
companiesthose listed in this joint Annual Report on Form 10-K under Part 1,I, Item 1. Business,Business. B. - "Cruise“Cruise Operations -– Competition."
However,”
In addition, we operate in the vacation market, and cruising is only one of many alternatives for people choosing a vacation. We therefore risk losing business not only to other cruise lines, but also to other vacation operators that provide other travel and leisure options, including, but not limited to, hotels, resorts, theme parks, organized tours, land-based casino operators and package holidays and tours.
vacation ownership properties.
In the event that we do not compete effectively with other cruise companies and other vacation alternatives, our results of operations and financial condition could be adversely affected.
o Overcapacity within the cruise and land-based vacation industry
could have a negative impact on net revenue yields and increase
operating costs, thus resulting in ship, goodwill and/or trademark
asset impairments, all of which could adversely affect
profitability.
• | Overcapacity in the cruise ship and land-based vacation industries could have a negative impact on our net revenue yields and increase operating costs, thus resulting in ship, goodwill and trademark asset impairments, all of which could adversely affect profitability. |
Cruising capacity has grown in recent years and we expect it to continue to increase over the next fivethree years as allmost of the major cruise vacation companies are expected to introduce new ships. In order to utilizefill new capacity, the cruise vacation industry will probably need to increase its share of the overall vacation market. The overall vacation market is also facing increases in land-based vacation capacity, which will also will impact us. Failure to increase our share of the overall vacation market is one of a number of factors that could have a negative impact on our net revenue yields. In some prior years, our net
revenue yields were negatively impacted as a result of a variety of factors,
including capacity increases. Should net revenue yields be negatively impacted, our results of operations and financial condition could be adversely affected, including the impairment of the value of our ships, goodwill and/orand trademark assets. In addition, increased cruise capacity could impact our ability to retain and attract qualified crew, including officers, at competitive costs and, therefore, increase our shipboard employee costs.
o Accidents, unusual weather conditions or natural disasters and other
incidents affecting the health, safety, security and vacation
satisfaction of passengers could have an adverse affect on our sales
and profitability.
26
• | Accidents, the spread of contagious diseases and threats thereof, adverse weather conditions or natural disasters and other incidents affecting the health, safety, security and satisfaction of guests and crew could have an adverse effect on our sales and profitability. |
The operation of cruise ships, involveshotels, land tours, port facilities and shore excursions involve the risk of accidents, including those caused by the improper operation of our ships, passengermotorcoaches and trains, guest and crew illnesses such as from the spread of contagious diseases, mechanical failures, fires, collisions, groundings, and other incidents at sea or while in port or on land, which may cause injury and death, or the alteration of itineraries or cancellation of a cruise or series of cruises or tours. These types of incidents may bring into question passengerguest and crew health, safety, health, security and vacation satisfaction, and thereby adversely effect future industry performance,affect our sales and profitability.
32
In addition,particular, our cruisesability to effectively and port facilitiesefficiently operate shipboard and shoreside activities may be impacted by unusualwidespread illnesses resulting in, among other things, reduced demand for cruises and cruise cancellations and employee absenteeism that could have an adverse affect on our sales and profitability. For example, a severe outbreak of the flu virus or some other pandemic could, among other things, disrupt our ability to embark/disembark passengers and crew, disrupt air travel to and from ports, increase costs for prevention and treatment and adversely affect our supply chain. This could also adversely impact cruise demand in areas unaffected by such an outbreak.
Our cruise ships, hotels, land tours, port facilities, shore excursions and other service providers may be impacted by adverse weather patterns or natural disasters, such as hurricanes and earthquakes. For example,These events could result in, 2005 Hurricane Wilmaamong other things, increased port related and other costs as third-party operators seek to charge us additional amounts in order to recover expenses caused the temporary closing of cruise ports in South
Florida and also destroyed our pier facility in Cozumel, Mexico, which is not
expected to re-open until late-2008.by adverse events. 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 an adverse affect on our sales and profitability.
o Adverse publicity concerning
Furthermore, some of the same factors that impact our guests’ decisions to cruise industry in general, orwith us in particular, could affectmay also impact our reputation and harm our future sales
and profitability.
ability to employ qualified crew.
• | Adverse publicity concerning the cruise industry in general, or us in particular, including any adverse impact that cruising may have on the marine environment, could impact the demand for cruises and affect our reputation and harm our future sales and profitability. |
Maintaining a good reputation is critical to our business. Reports, whether true or not, of ship accidents and other incidents at sea or while in port, including missing passengers,guests, inappropriate crew or passengerand guest behavior, passenger oronboard crimes, crew and guest illnesses such as incidents of stomach flu or other contagious diseases, security breaches, terrorist threats and attacks and other adverse events can result in negative publicity.publicity, and the perception that cruising is more dangerous than other vacation alternatives. In addition, publicity regarding the adverse environmental impact of cruise ships on marine life could diminish our reputation. Anything that damages our reputation, (whetherwhether or not justified),justified, including adverse publicity about the safety and passengerguest satisfaction of cruising, or the vacation industry in general, could have an adverse affect impact on demand, which could lead to price discounting and a reduction in our net income.
o We are subject to many economic and political factors, including
changes in and compliance with numerous rules and regulations that
are beyond our control, which could result in increases in our
operating, financing and tax costs and could harm future sales and profitability.
Some of our operating costs, including fuel, food, insurance, payroll and
security costs, are subject to increases because of market forces, economic or
political instability or decisions beyond our control. In addition, interest
rates, currency fluctuations and our ability to obtain debt or equity financing
are dependent on many economic and political factors. Actions by U.S. and
non-U.S. taxing jurisdictions could also cause an increase in our costs.
For example, in 2006, 2005 and 2004 fuel costs accounted for 14.4%, 11.9%
and 9.3%, respectively, of our total cruise operating expenses. Economic and
political conditions in certain parts of the world make it difficult to predict
the price of fuel in the future. Future increases in the cost of fuel globally
would increase the cost of our cruise ship operations.
In addition, the State of Alaska recently instituted new state taxes which
will impact the cruise industry operating in Alaska, and could result in a
reduction in demand for Alaska cruises. It is possible that other states,
countries or ports of call that we regularly visit may decide to also assess new
taxes specifically targeted to the cruise industry, which could increase our
operating costs and/or could decrease the demand for cruises and ultimately
decrease our net revenue yields.
Increases in operating, financing and tax costs could adversely affect our
results because we may not be able to recover these increased costs through
price increases charged to our passengers.
o Environmental legislation and regulations could affect operations
and increase our operating costs.
• | Environmental legislation and regulations could affect our operations, such as causing fuel shortages, supply disruptions, and changes in fuel specifications, and thus increase our operating costs, which could also impact our liquidity and credit ratings. |
Some environmental groups have lobbied for more stringent regulation of cruise ships. Some groups have also generated negative publicity about the cruise industry and its environmental impact. The U.S. Congress, the IMO and the U.S. Environmental Protection Agency periodically consider new laws and regulations to manage cruise ship pollution.discharges. In addition, various other regulatory agencies in the Statesstates of Alaska, California, Florida, Hawaii, Maine, Washington and elsewhere, including European regulatory organizations, have enacted or are considering new regulations or policies, such as requirements to use lower sulfur content fuels and stricter emission limits to reduce greenhouse gas effects, which could adversely impact the cruise industry.and other industries. See Part I, Item 1. Business,Business. B. - "Cruise“Cruise Operations -– Governmental Regulations"Regulations – Maritime Regulations for additional information.
27
The IMO has amended the MARPOL Annex VI regulations to reduce harmful emissions from ships. As described in “Maritime Environmental Regulations” as referenced above, these changes will result in reductions in ship sulfur oxide emissions by requiring progressive reductions in the sulfur content in fuel. These limits will be further reduced in designated ECAs, including ECAs that have been or could be proposed in prime cruising areas. As a result of these amendments, low sulfur fuel may be less available because of increased demand, and the cost of such fuel may increase. If utilized, new sulfur emissions abatement technologies may also increase costs. The increase in fuel prices impacts not only our fuel costs, but also some of our other expenses, such as crew travel, freight, and commodity prices, and can have an adverse impact on our profitability, liquidity and credit ratings.
33
Initiatives to limit greenhouse gas emissions have been introduced or are being considered in several European countries. Similarly, numerous bills related to climate change have been introduced in the U.S. Congress, which could adversely impact all industries. While not all are likely to become law, this is a strong indication that additional climate change related mandates will be forthcoming, and it is expected that they may adversely impact our costs, including, among other things, increasing fuel prices, including new taxes on bunker fuel, and establishing costly emissions trading schemes.
Current and future environmental laws and regulations, or liabilities arising from past or future releases of, or exposure to, hazardous substances or to vessel discharges, could increase our cost of compliance or otherwise materially adversely affect our business, results of operations and/orand financial condition.
o New regulations of health, safety, security and other regulatory
issues could increase our operating costs or negatively effect our
bookings and future net revenue yields and adversely affect net
income.
• | New regulations relating to the protection of disabled persons, employment, health, safety, security and other regulatory issues could increase our costs. |
We are subject to various international, national, state and local laws, regulations, treaties and employee union agreements related to, among other things, disabled persons, employment, health, safety and security laws, regulations and treaties. See Part I, Item 1.
Business, B. - "Cruise Operations-Governmental Regulations" for a detailed
discussion of these regulatory issues.security. We believe that health, safety, security and other regulatory issuesthese areas will continue to be areas of focusfocused on by relevant government authorities in the U.S., Europe and elsewhere. ResultingAccordingly, new legislation, or regulations or treaties, or changes in
existing legislation or regulations,thereto, could impact our operations and would likely subject us to increasingincreased compliance costs in the future. PursuantIn addition, due to increasing regulatory requirements applicable to our operations, appropriate training of crewmembers has become more time-consuming and increased our operating costs. See Part I, Item 1. Business. B. “Cruise Operations-Governmental Regulations” for a detailed discussion of some of these regulatory issues and related risks.
The governing bodies who promulgate the Western Hemisphere Travel Initiative, by the earlier of
June 1, 2009 or 90 days after the sanctioning of a People Access Security
Service ("PASS") card, U.S. citizens will be requiredlaws and regulations related to carry a passport or, if
available, a PASS card, for travel by land or sea to or from certain
countries/areas that are currently exempt from passport requirements,disabled persons, such as the Caribbean, Canada and Mexico. The State DepartmentAmerican with Disabilities Act and the DepartmentEuropean Union’s Passenger Rights Proposal, have each recently been considering whether the cruise industry’s existing practices and physical facilities are sufficient to meet the needs of Homeland Securitycruise passengers with disabilities. Although we have made improvements to our practices and physical facilities to enhance the onboard experience of our disabled guests, the adoption of new laws, regulations or compliance agreements could require further enhancements to our ships and increases in our operating expenses.
• | Changes in the U.S. Internal Revenue Code, applicable U.S. income tax treaties, and the uncertainty of the DLC structure under the Internal Revenue Code may adversely affect the U.S. federal income taxation of our U.S. source shipping income. In addition, changes in the UK, Italian, German, Australian, Spanish, Portuguese and other countries’ or states’ income or other tax laws, regulations or treaties could also adversely affect our net income. |
We believe that substantially all of the U.S. source shipping income of each of Carnival Corporation and Carnival plc qualifies for exemption from U.S. federal income tax, either under (1) Section 883 of the Internal Revenue Code; or (2) applicable U.S. income tax treaties, and should continue to so qualify under the DLC structure. There is, however, no existing U.S. federal income tax authority that directly addresses the tax consequences of implementation of a DLC structure for purposes of Section 883 or any other provision of the Internal Revenue Code or any income tax treaty and, consequently, these matters are collaboratingnot free from doubt.
If we did not qualify for exemption from substantially all U.S. federal income taxes or if such exemptions or laws were changed, we would have significantly higher U.S. income tax expense. In addition, changes in the income or other tax laws affecting our cruise businesses in the UK, Italy, Germany, Australia, Spain, Portugal and elsewhere could result in higher income or other taxes being levied on our cruise operations, thus resulting in lower net income. For example, the state of Alaska instituted income taxes in 2007, which directly impacted the cruise industry operating in Alaska.
In recent years, members of the U.S. Congress and the U.S. Executive Branch have been considering substantive changes designed to reform the existing U.S. international tax laws. Some of these changes, if enacted, could adversely impact U.S. federal taxation of our income. For example, several proposals included provisions that would have changed the rules for determining the tax residency of a non-U.S. company managed and controlled in the U.S. Any modification to the U.S. federal income tax laws that affects the tax residency of a non-U.S. company managed and controlled in the U.S. could adversely affect the U.S. federal taxation of some or all of our income. Although the most recently proposed legislation in this area did not include any “management and control” provision, we are unable to predict whether any of these changes, or other proposals, will ultimately be enacted. We will continue to monitor the administrative, legislative and judicial developments in this area and evaluate a variety of possible courses of action, including restructuring of our organization. However, there is no assurance that such actions, if taken, will successfully mitigate adverse consequences of these or other changes to the existing U.S. international tax laws.
See Part I, Item 1. Business. G. “Taxation” for additional discussion of tax risks.
34
• | We are subject to many economic, market and political factors that are beyond our control, which could result in increases in our operating, financing and non income tax costs and could harm future sales and profitability. |
Some of our operating costs, including fuel, food, insurance, payroll and security costs, are subject to increases because of market forces, economic or political instability or decisions beyond our control. In addition, interest rates, currency exchange rate fluctuations and our ability to obtain debt or equity financing are dependent on many economic, market and political factors. Actions by taxing jurisdictions could also cause an increase in our costs. Increases in operating, financing and non income tax costs could adversely affect our results because we may not be able to recover these increased costs through price increases charged to our guests and such increases may adversely impact our liquidity and credit ratings.
For example, in 2009, 2008 and 2007 fuel costs accounted for 14.7%, 20.3% and 14.9%, respectively, of our total cruise operating expenses. Economic, market and political conditions in certain parts of the world, including fuel demand and supply disruptions, make it difficult to predict the price and availability of fuel in the future. In 2008, we had taken actions to partially offset the effects of higher fuel costs through the addition of temporary fuel supplement fees charged by substantially all of our brands. Through these fuel supplement efforts, we managed to collect approximately 30% of the impact of increased annual 2008 fuel prices. Success in trying to offset higher fuel costs with ticket price increases and fuel supplements is largely influenced by competitive factors and economic conditions, which can vary significantly depending on the developmentmarket served, and the guests’ perception of these costs. As a PASS card system.
The PASS cardresult of the late 2008 decreases in fuel prices from their previous high levels, substantially all of our brands no longer charge a fuel supplement. However, future increases in the global cost of fuel would increase the cost of our cruise ship operations. In the future we may be unable to implement additional fuel conservation initiatives and other best practices, or increase ticket prices and/or collect fuel supplements, which would help offset these fuel cost increases.
In addition, the state of Alaska instituted excise and passenger head taxes in 2007, which directly impacted the cruise industry operating in Alaska. It is a secure credentialpossible that verifiesother states, countries or ports of call that we regularly visit may also decide to assess new taxes or fees or change existing taxes or fees specifically targeted to the citizenshipcruise industry and identityits employees and guests, including value added taxes on cruise tickets and onboard revenues and changes in the scope of U.S. nationals who re-enterincome that is includable within tonnage tax regimes, which could increase our operating costs and could decrease the United Statesdemand for cruises and is seen as a less expensive
alternative to a passport.
Since many cruise customers visiting these destinations may not currently
have passports or may not obtain a PASS card if and when available, it is likely
that this will have some negative effect onultimately decrease our bookings and future net revenue yields when the regulations take effect. There are a number of factors that
could influence the ultimate impact of these regulations, such as customer
travel patterns, the cost and ease of obtaining PASS cards, customer price
sensitivity and the cost and effectiveness of mitigating programs we and others
have established or will establish.
o Delays in ship construction and problems encountered at shipyards
could reduce our profitability.
net income.
• | Our ability to implement our shipbuilding programs and ship maintenance, repairs and refurbishments, including ordering additional ships for our cruise brands from shipyards, on terms that are favorable or consistent with our expectations could reduce our profitability. |
The construction, refurbishment, maintenance and repair of cruise ships is aare complex processprocesses and involvesinvolve risks similar to those encountered in other large and sophisticated construction, refurbishment, maintenance and repair projects, includingwhich could cause delays in completion and delivery.of such work. In addition, industrial actions,
insolvencywork stoppages, insolvencies or other financial problems ofdifficulties at the shipyards buildingand their subcontractors and suppliers who build, refurbish, maintain or repair our ships could also delay or prevent the delivery of our ships under construction.construction or the refurbishment, repair and maintenance of existing ships in our fleet. These events could adversely affect our profitability. However, the impact from a delay in delivery couldof our newbuilds is expected to be partially mitigated by contractual provisions and refundbank guarantees obtained bythat we require shipyards to provide to us. In addition, the consolidation of the Europeancontrol of certain cruise shipyards in recent yearsor cruise shipyard insolvencies could result in higher prices for future new ship
orders,less shipyard availability thus reducing competition and increasing prices. Finally, the lack of qualified shipyard repair facilities could result in the inability to repair and maintain our ships on a timely basis, which could reduce ouralso result in reduced profitability.
Finally, as
35
As of November 30, 2006,2009, we had entered into foreign currency swapsforwards and/or options to fix a portion of the cost in U.S. dollars or sterling of two of our euro denominatedeuro-denominated shipbuilding contracts. If the shipyard with which we have contracted is unable to perform under the related contracts, the foreign currency swapsforwards and/or options related to the shipyard'sshipyard’s shipbuilding contracts would still have to be honored. This might require us to realize a loss on existing foreign currency swapsforwards and/or options without having
the ability to have an offsetting gain on our foreign currency denominated shipbuilding contracts, thus resulting in an adverse effect on our financial results. o As all of our newbuilds are being built by European shipyards and substantially all our newbuild costs are priced in euros, the ability to purchase ships for our North American and UK brands at favorable U.S. dollar and sterling prices, respectively, is adversely impacted as a result of the weaker U.S. dollar and weaker sterling compared to the euro. This can result in higher newbuild costs and reduced profitability for our North American and UK brands. Finally, 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 net income.
In connection with our shipbuilding contracts, we do not anticipate any contractual breakage or cancellations by us to occur. However, if any were to occur, it could result in, among other things, the forfeiture of our payments and the imposition of contractual liquidated damages.
• | Our success depends upon the continued strength of our cruise brands and our ability to implement our brand strategies. |
We believe that our cruise brands have contributed significantly to the success of our business and that maintaining and enhancing our brands is critical to expanding their customer base. In addition, the ability of our brands to successfully target different segments of the various vacation markets in which they operate enables them to continue to expand and strengthen their business. Failure to protect our brands from infringers or to grow the brands globally could have a material adverse effect on our business and results of operations.
• | Our international operations are subject to additional risks not generally applicable to our U.S. operations. |
Our future operating cash flow mayinternational operations are subject to additional risks, including, but not be sufficientlimited to, fund future
obligations,potential adverse changes in the diplomatic relations between foreign countries, hostility from local populations, restrictions and taxes on the withdrawal of foreign investment and earnings, government policies against the cruise business, investment restrictions or requirements, diminished ability to legally enforce our contractual rights in foreign countries, foreign exchange restrictions and fluctuations in foreign currency exchange rates, withholding and other taxes on remittances and other payments by subsidiaries, and changes in and application of foreign taxation structures including value added taxes.
• | Geographic regions in which we try to expand our business may be slow to develop, and ultimately not develop how we expect, thus resulting in the slower growth of our business. |
As we expand our global presence into both existing lower-penetrated markets and emerging markets, it requires, among other things, investments and start-up costs that we may not recover through future revenues from these markets. In addition, we cannot be ablecertain that these markets will ultimately develop as we expect. Accordingly, our business expansion may not produce the returns that we had expected. For instance, in 2006 we entered the Chinese market, and it is still too early to obtain additional financing,determine if necessary, on terms that are favorable or consistent with our
expectations.
this market will fully develop as expected over the long-term.
• | Whether our future operating cash flow will be sufficient to fund future obligations and whether we will be able to obtain financing, if necessary, in sufficient amounts and on terms that are favorable or consistent with our expectations may adversely impact our financial results. In addition, our counterparties’ ability to perform may adversely impact us. |
Our forecasted cash flow from future operations may be adversely affected by various factors, including, but not limited to, declines in customerguest demand, increased competition, overcapacity, inadequate liquidity and other issues in the deterioration in general economicglobal debt and business conditions,equity markets, terrorist and pirate attacks and the threats thereof, the impact of the spread of contagious diseases such as flu virus, ship accidents and other incidents, adverse publicity, and increases in fuel prices as well asand other factors noted under these "Risk Factors" and under the "Cautionary Note Concerning Factors
That May Affect Future Results" section below.“Risk Factors.”. To the extent that
28
on hand and current and future committed external sources of liquidity, including committed ship and other financings, we will have to secure such financing from banks or through the offering of debt and/or equity securities in the public or private markets. There is no guarantee that such financings will be available in the future to fund our future obligations.
36
Our access to, and the cost of, financing will depend on, among other things, conditions or disruptions in the global financing markets, the maintenance of strongour investment grade long-term credit ratings.ratings and the availability of sufficient amounts of financing. Carnival Corporation and Carnival plc'splc’s senior, unsecured long-term debt ratings are "A3" by Moody's,
"A-" byA3 from Moody’s Investors Service (“Moody’s”) and BBB+ from Standard & Poor'sPoor’s Rating Services (“S&P”). Carnival Corporation’s and "A-" by Fitch Ratings. Carnival Corporation'splc’s short-term corporate credit ratings are "Prime-2" by Moody's, "A-2" by Standard
& Poor'sP-2 from Moody’s and "F2" by Fitch Ratings.
o Geographic regionsA-2 from S&P’s. In March 2009, our A- credit rating from S&P was downgraded to BBB+ and assigned a negative outlook, which reflected S&P’s concerns that the weakened state of the economy and the pullback in which we try to expand our business may be
slow to develop, and ultimately not develop how we expect, thus
resulting in the slower growth of our business.
As we expand our global presence, we enter into new developing markets,
which require, among other things, certain start-up costs that we may not be
able to recover through future revenues that these new markets will generate. In
addition, we cannot be certain that these markets will ultimately develop as we
expect. Accordingly, our business expansion plans may not produce the returns
that we had expected. For instance, we recently entered the Chinese market, and
it is currently too early to determine if it will develop as expected.
o We rely to a large extent on scheduled commercial airline services
for guest connections and, therefore, increases in the price of, or
major changes or reduction in commercial airline services, could
undermineconsumer spending would pressure our ability to provide reasonably priced vacation packagessustain our BBB+ credit rating. However in late January 2010, S&P changed our outlook from negative to stable. This change reflects S&P’s expectation that the improving trend in our advance bookings will continue, as well as S&P’s expectations of improving pricing trends, consumer spending patterns and gross domestic product growth in the U.S. and Europe.
The ability of our counterparties, primarily associated with our cash equivalents, committed financing facilities, contingent obligations, derivative instruments, insurance contracts and new ship progress payment guarantees, to perform may adversely impact us if any of their financial positions weaken materially or they suffer other financial disruptions.
• | Continuing financial viability of our travel agent distribution system, air service providers, and other key vendors in our supply chain is essential to allowing us to profitably operate our business. In addition, reductions in the availability of and increases in the prices for the services and products provided by these vendors can adversely impact our net income. |
Significant disruptions or contractions to our guests.
travel agent 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 sales and related commission costs. In addition, the vast majority of our guests book their cruises through independent travel agents, wholesalers and tour operators. These parties generally sell and market our cruises on a nonexclusive basis. Although we believe we offer commissions and other incentives to them for booking our cruises that are comparable to those offered by others in the cruise industry, there can be no guarantee that our competitors will not offer higher commissions and incentives in the future.
Some of our guests depend on scheduled or chartered commercial airline services to transport them to or from the ports where our cruises embark and disembark. Changes or disembark.
Increases in the price of airfare would increase the overall vacation price to
our guests and may adversely affect demand for our cruises. In addition, changesdisruptions in commercial or chartered airline services as a result of strikes, financial instability or viability, adverse weather conditions 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 to or from our cruise ships and increase our cost of sales which would, in turn, have an adverse effect on our results of operations. o We rely on external sales distribution channelsIn addition, increases in the prices of airfares would increase the overall vacation price to our guests and may adversely affect demand for mostour cruises.
Economic downturns may impact the financial viability of other key vendors in our supply chain. For example, some of our guests bookingskey vendors, such as hotel and therefore, major changesrestaurant suppliers, have been adversely affected during the recent economic downturn. The interruption in the costsservices or availability of external distribution channelsgoods we purchase from them could result in a
reduction inadversely impact our sales revenuesoperations and net income.
In 2006, the vast majority of our guests booked their cruises through
independent travel agents, wholesalers and tour operators. These parties
generally sell and market our cruises on a nonexclusive basis. Although we offer
commission and other incentives to them for booking our cruises that are
comparable to those offered by others in the cruise industry, there can be no
guarantee that our competitors will not offer higher commissions and incentives
in the future. In addition, significant disruptions or contractions to these
businesses could have an adverse effect on our sales and related commission
costs.
o The decision to self-insure against various risks or the inability
to obtain insurance for certain risks at reasonable rates could
result in higher expenses.
37
• | Our decisions to self-insure against various risks or the inability to obtain insurance for certain risks at reasonable rates could result in higher expenses. |
We seek to maintain comprehensive insurance coverage at commercially reasonable rates. We believe that our current coverage is adequate to protect us against most of the significant risks involved in the conduct of our business, although we do elect to self-insure or use higher deductibles for varioussubstantially all the insurable risks we face in order to minimize the cost of our insurance coverage.coverages. Accordingly, we are not protected against all risks, which could result in unexpected increases in our expenses in the event of an incident.
In addition, a new protocol to the Athens Convention is in the process of
being ratified, which would require some passenger ship operations to maintain
insurance or some other form of financial security, to cover the limits of
liability under the Athens Convention. If the protocol is ratified, we cannot be
certain that affordable and viable insurance markets will be available to
provide the required coverages. If the new protocol is ratified we expect our
insurance costs to increase.
29
Finally, we
We may also be subject to additional premium costs, in amounts based not only on our own claim records, but also on the claim records of all other members of the protection and indemnityP&I associations through which we receive indemnity coverage for tort liability. If we, or other members of our P&I associations, were to sustain significant losses in the future, our ability to obtain insurance coverage or coverage at commercially reasonable rates could be materially adversely affected. o Disruptions to our information technology networksFinally, if other marine insurers experience more claims, this could result in decreases in our net income.
additional premium costs for us.
• | Disruptions and other damages to our information technology networks and operations could result in decreases in our net income. |
Our ability to increase revenues and decreasecontrol costs, as well as our ability to serve passengersguests most effectively, depends in part on the reliability of our sophisticated information technology ("IT"(“IT”) networks. We use software and other IT systems to, among other things, manage our inventory of cabins held for sale and set their pricing in order to maximize our revenues,revenue yields, and to optimize the effectiveness and efficiency of our shoreside and shipboard operations. Any disruptiondisruptions or other damage to these computer systems or unauthorized access to confidential customer or employee personal information could adversely impact our customer
service,guest services and satisfaction, employee relationships, decrease the volume of our business and result in increased costs. In addition, the operation, maintenance and updating of these networks is dependent on third-party technologies, systems and services for which there is no certainty of uninterrupted availability. While we have invested and continue to invest in IT security initiatives and disaster recovery plans, these measures cannot insulate us from IT disruptions that could result in adverse effects on our operations and net income.
o The continued availability of attractive port destinations for our
cruise ships could reduce our net revenue yields and net income.
• | Lack of continuing availability of attractive, convenient and safe port destinations. |
We believe that attractive, convenient and safe port destinations, including ports that are not overly congested with tourists, are major reasons why our guests choose a cruise versus an alternative vacation option. The continuing availability of these types of ports, including the specific port facility at which our guests will embark and disembark, is affected by a number of factors including, but not limited to, existing capacity constraints, security, safety and environmental concerns, unusualadverse weather patternsconditions and natural disasters, financial limitations on port development, political instability, exclusivity arrangements that ports may have with our competitors, local governmental regulations and charges and local community concerns about both port development and other adverse impacts on their communities from additional tourists. The inability to continue to utilize, maintain, rebuild, if necessary, and increase the number of ports that our ports ofships call on could adversely affect our net revenue yields and net income.
o The DLC structure involves risks not associated with the more common
ways of combining the operations of two companies, and these risks
may have an adverse effect on the economic performance of the
companies and/or their respective share prices.
• | The DLC structure involves risks not associated with the more common ways of combining the operations of two companies, and these risks may have an adverse effect on the economic performance of the companies and their respective share prices. |
The DLC structure is a relatively uncommon way of combining the management and operations of two companies and it involves different issues and risks from those associated with the other more common ways of effectingimpacting a business combination, such as a merger or exchange offer to create a wholly owned subsidiary. In our DLC structure, the combination is effected primarily by means of contracts between Carnival Corporation and Carnival plc and not by operation of a statute or court order. The legal effect of these contractual rights may be different from the legal effect of a merger or amalgamation under statute or court order, and there may be difficulties in enforcing these contractual rights. Shareholders and creditors of either company might challenge the validity of the contracts or their lack of standing to enforce rights under these contracts, and courts may interpret or enforce these contracts in a manner inconsistent with the express provisions and intentions we included in such contracts. In addition, shareholders and creditors of other companies might successfully challenge other DLC structures and establish legal precedents that could increase the risk of a successful challenge to our DLC structure.
38
We are
maintainingmaintain two separate public companies and comply with both Panamanian corporate law and English company laws and different securities and other regulatory and stock exchange requirements in the UK and the U.S. This structure requires more administrative time and cost than was the case for each company individually, which has an adverse effect on our operating efficiency.
o Changes under the Internal Revenue Code, applicable U.S. income tax
treaties, and the uncertainty of the DLC structure under the
Internal Revenue Code may adversely affect the U.S. federal income
taxation of our U.S. source shipping income. In addition, changes in
the UK, Italian, German, Australian and other countries' or states'
income tax laws, regulations or treaties could also adversely affect
our net income.
30
We believe that substantially all of the U.S. source shipping income of
each of Carnival Corporation and Carnival plc qualifies for exemption from U.S.
federal income tax, either under (1) Section 883 of the Internal Revenue Code;
(2) U.S.-Italian income tax treaty; or (3) other applicable U.S. income tax
treaties, and should continue to so qualify under the DLC structure. There is,
however, no existing U.S. federal income tax authority that directly addresses
the tax consequences of implementation of a dual listed company structure for
purposes of Section 883 or any other provision of the Internal Revenue Code or
any income tax treaty and, consequently, these matters are not free from doubt.
As discussed above, if we did not qualify for exemption from U.S. federal
income taxes we would have higher income taxes and lower net income. Finally,
changes in the income tax laws affecting our cruise businesses in the UK, Italy,
Germany, Australia and elsewhere could result in higher income taxes being
levied on our cruise operations, thus resulting in lower net income.
See Part I, Item 1. Business, G. - "Taxation" for additional information.
o
• | A small group of shareholders collectively owned, as of January 21, 2010, approximately 27% of the total combined voting power of our outstanding shares and may be able to effectively control the outcome of shareholder voting. |
As of January 31,
2007, approximately 29% of the total combined voting power of our
outstanding shares and may be able to effectively control the
outcome of shareholder voting.
A21, 2010 a group of shareholders, consisting of some members of the Arison family, including Micky Arison, and trusts established for their benefit, beneficially owned approximately 37%34% of the outstanding common stock of Carnival Corporation, which shares represent sufficient shares entitled to constitute a quorum at shareholder meetings and to cast approximately 29%27% of the total combined voting power of Carnival Corporation & plc. Depending upon the nature and extent of the shareholder vote, this group of shareholders may have the power to effectively control, or at least to influence substantially, the outcome of certain shareholder votes and, therefore, the corporate actions requiring such votes.
o
• | Carnival Corporation and Carnival plc are not U.S. corporations, and our shareholders may be subject to the uncertainties of a foreign legal system in protecting their interests. |
Carnival Corporation and Carnival plc are not U.S. corporations, and
our shareholders may be subject to the uncertainties of a foreign
legal system in protecting their interests.
Carnival Corporation'sCorporation’s corporate affairs are governed by its third amendedThird Amended and restated articlesRestated Articles of incorporationIncorporation (“Articles”) and amendedThird Amended and restated by-lawsRestated By-Laws (“By-Laws”) and by the corporate laws of Panama. Carnival plc is governed by its articlesArticles of association and memorandum of associationAssociation and by the corporate laws of England and Wales. The contracts that control the relationship between Carnival Corporation and Carnival plc under the DLC are governed by the laws of Panama, the Isle of Man and the Cayman Islands. The corporate laws of Panama, and England and Wales, the Isle of Man and the Cayman Islands may differ in some respects from the corporate laws in the U.S.
o
• | Provisions in Carnival Corporation’s and Carnival plc’s constitutional documents may prevent or discourage takeovers and business combinations that our shareholders might consider to be in their best interests. |
Carnival Corporation'sCorporation’s Articles and By-Laws and Carnival plc's
constitutional documents may prevent or discourage takeovers and
business combinations that our shareholders might consider to be in
their best interests.
Carnival Corporation's amended articlesplc’s Articles of incorporation and by-laws and
Carnival plc's articles of associationAssociation contain provisions that may delay, defer, prevent or render more difficult a takeover attempt that our shareholders consider to be in their best interests. As a result, these provisions may prevent our shareholders from receiving a premium to the market price of our shares offered by a bidder in a takeover context. Even in the absence of a takeover attempt, the existence of these provisions may adversely affect the prevailing market price of our shares if they are viewed as discouraging takeover attempts in the future.
Specifically, Carnival Corporation's articles of incorporationCorporation’s Articles contain provisions that prevent third parties, other than the Arison family and trusts established for their benefit, from acquiring beneficial ownership of more than 4.9% of its outstanding shares without the consent of Carnival Corporation's
boardCorporation’s Board of directorsDirectors and provide for the lapse of rights, and sale, of any shares acquired in excess of that limit. The effect of these provisions may preclude third parties from seeking to acquire a controlling interest in us in transactions that shareholders might consider to be in their best interests and may prevent them from receiving a premium above market price for their shares.
For a description of the reasons for the provisions see Part I, Item 1.
Business, G. - "Taxation- Application of Section 883 of the Internal Revenue
Code."
31
Cautionary Note Concerning Factors That May Affect Future Results
Some of the statements, estimates or projections contained in this joint Annual Report on Form 10-K are "forward-looking statements"“forward-looking statements” that involve risks, uncertainties and assumptions with respect to us, including some statements concerning future results, outlook,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. We have tried, whereverwhenever possible, to identify these statements by using words like "will," "may," "believes," "expects,"
"anticipates," "forecast," "future," "intends," "plans,"“will,” “may,” “could,” “should,” “would,” “believe,” “expect,” “anticipate,” “forecast,” “future,” “intend,” “plan,” “estimate” and "estimates" and for
similar expressions.
expressions of future intent or the negative of such terms.
39
Because forward-looking statements involve risks and uncertainties, there are many factors that could cause our actual results, performance or achievements to differ materially from those expressed or implied in this joint
Annual Report on Form 10-K. Forward-looking statements include those statements which may impact, among other things, the forecasting of our earnings per share, net revenue yields, booking levels, pricing, occupancy, operating, financing and/orand tax costs, fuel expenses, costs cost per available lower berth day, estimates of ship depreciable lives and/orand residual values, outlook or business prospects.
liquidity, goodwill and trademark fair values and outlook.
Certain of the risks we are exposed to are identified in "Management's
Discussion and Analysis of Financial Condition and Results of Operations-
Cautionary Note Concerning Factors That May Affect Future Results" in Exhibit 13
to this joint Annual Report on Form 10-K and in this Item 1A. "Risk“Risk Factors."
These sections contain” This section contains important cautionary statements and a discussion of many of the factors that could materially affect the accuracy of our forward-looking statements and/orand adversely affect our business, results of operations and financial position.
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 listing rules, we expressly disclaim any obligation to disseminate, after the date of this joint Annual Report on Form
10-K, 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.
Item 1B. | Unresolved Staff Comments. |
None.
Item 2. Properties.
Item 2. | Properties. |
The Carnival Corporation and Carnival plc corporate headquarters and our operating units' principallarger shoreside operations and headquarterslocations are as follows:
Entity/Brand | Location | Square Footage | Own/Lease | |||
Carnival Corporation headquarters and Carnival Cruise Lines | Miami, FL U.S.A. | 456,000/ | Own/Lease | |||
Princess | Santa Clarita, CA U.S.A. | 361,000 | Lease | |||
Holland America Line, Holland America | Seattle, WA U.S.A. | 234,000 | Lease | |||
Costa | Genoa, Italy | 185,000/24,000 | Own/Lease | |||
P&O Cruises, | Southampton, England | 150,000 | Lease | |||
AIDA | Rostock, Germany | 122,000 | Lease | |||
P&O Cruises Australia | Sydney, Australia | 65,000 | Lease | |||
Carnival plc headquarters and UK sales | London, England | 8,000 | Lease |
In addition, we alsoown, lease 27,000 square feet of office spaceor have controlling interests in Colorado
Springs, Colorado and 10,000 square feet in Fort Pierce, Florida for additional
Carnival Cruise Lines reservation centers and 20,000 square feet in Los Angeles,
California for Princess' entertainment department. In Williston, North Dakota,
Holland America Line owns 22,000 square feet of office space that is also a
reservation center. Finally, we own or lease port facilities in Barcelona, Spain; Cozumel, Mexico,
Juneau, Alaska, Long Beach, California, Savona, Italy andMexico; Grand Turk, the Turks & Caicos Islands.
Islands; Juneau, Alaska; Long Beach, California; Roatán, Honduras and Savona, Italy.
Our cruise ships, headquarters, port and other shoreside operations, headquarter facilities and Holland America Tours' and Princess Tours'Alaska Tours’ properties, are all well maintained and in good condition. We evaluate our needs periodically and obtain additional facilities when deemed necessary. We believe that our facilities are adequate for our current needs.
Our cruise ships and Holland America Line'sLine’s and Princess'Princess’ private islands, Half Moon Cay and Princess Cays, respectively, are briefly described in Part I, Item 1. Business,Business. B. - "Cruise“Cruise Operations."” The hotel properties associated withowned and operated by Holland America Tours and Princess Alaska Tours operations, substantially all of which
are owned, are briefly described in Part I, Item 1. Business,Business. A. - "General."
Item 3. Legal Proceedings.
On September 21, 2006, a class action complaint was filed by J. B. Miller
on behalf of a purported class of past passengers against Holland America Line
("HAL") in the U.S. District Court for the Western District of Washington. The
complaint alleges that HAL (a) failed to disclose that shore excursion vendors
paid HAL to promote their services as required by an Alaska statute, and (b)
collected and retained payment from passengers for Passenger Vessel Service Act
("PSVA") violations in certain instances when HAL did not actually incur the
fines. The complaint seeks (i) certification as a class action, (ii) statutory
damages under Alaska's consumer protection statutes, (iii) damages for each PSVA
fine collected and additional damages for each PSVA fine collected where no fine
was imposed, (iv) injunctive relief and (v) attorneys' fees, costs and interest.
We believe that we have meritorious defenses to these claims and intend to
vigorously defend this matter.
“General.”
Item 3. | Legal Proceedings. |
In January 2006,2008, the Office of the Attorney General of Florida (“Attorney General”) initiated an investigation to determine whether there is or has been a lawsuit was filed against Carnival Corporation and its
subsidiaries and affiliates,violation of Florida antitrust laws in connection with the setting by us and other non-affiliatedunaffiliated cruise lines in the U.S.
District Court for the Southern District of New York on behalf of James Jacobs
and a purported class of owners of intellectual property rights to musical plays
and other works performed in the U.S. The plaintiffs claim infringement of
copyrights to Broadway, off Broadway and other plays. The suit seeks payment of
(i) damages, (ii) disgorgement of alleged profits and (iii) an injunction
against future infringement. We intend to vigorously defend this matter.
As of February 2007, three separate actions had been filed against each of
Carnival Corporation and Princess Cruise Lines, Ltd. in either the U.S. District
Court for the Southern District of Florida ("Florida Court") or the U.S.
District Court for the Central District of California ("California Court") on
behalf of some current and former crew members alleging that Carnival Cruise
Lines and Princess Cruises failed to timely pay the plaintiffs for overtime and
other wages due (the "Wage Actions"). These six actions generally seek payment
of (i) damages for breach of contract or restitution for back wages, (ii)
damages under the Seaman's Wage Act and (iii) interest.
Carnival:
In November 2005 and in March 2005, two lawsuits were filed against
Carnival Corporation in the Florida Court. In May 2006, Carnival
Corporation entered into a settlement agreement for these combined
lawsuits. The settlement received final court approval in 2006 resulting
in the dismissal of the cases. The settlement agreement required Carnival
Corporation to establish a settlement fund, the ultimate net amount of
which was estimated and recorded as an expense in 2006. In February 2006 a
lawsuit was filed against Carnival Corporation in the California Court,
which was dismissed in November 2006 with prejudice.
33
Princess:
In November 2005, a lawsuit was filed against Princess in the Florida
Court. In September 2006, Princess entered into a settlement agreement,
which is subject to final court approval. The settlement agreement
required Princess to establish a settlement fund, the ultimate net amount
of which was estimated and recorded as an expense in 2006. We cannot be
certain that such approval will be obtained. However, the Florida Court
has granted preliminary approval of the settlement. A hearing is scheduled
for February 2007.
Also in September 2006, Princess settled the third class action filed
against it in the California Court.fuel supplements. In December 2006, preliminary approval
of2009, we were informed that the settlement was issued byAttorney General has closed the California Court. As part of the
settlement, plaintiff's appeal of summary judgment granted to Princess in
the remaining Wage Action will be dismissed. We cannot be certain that
final approval of the settlement will be granted.
On November 22, 2000, Costa instituted arbitration proceedings in Italy to
confirm the validity of its decision not to deliver its ship, the Costa
Classica, to the shipyard of Cammell Laird Holdings PLC ("Cammell Laird") under
a 79 million euro denominated contract for the conversion and lengthening of the
ship in November 2000. Cammell Laird joined the arbitration proceeding on
January 9, 2001 to present its counter demands. On January 9, 2001, Costa gave
Cammell Laird notice of termination of the contract and Cammell Laird replied
with its notice of termination of the contract on February 2, 2001. In October
2006 the arbitrator ruled in Costa's favor and, accordingly, confirmed Costa's
decision not to deliver the Costa Classica to Cammell Laird. Unless the Cammell
Laird administrators appeal the Tribunal's decision by December 2007, this
matter is concluded.
Item 4. Submission of Matters to a Vote of Security Holders.
investigation without taking any actions.
40
Item 4. | Submission of Matters to a Vote of Security Holders. |
None.
Executive Officers of the Registrants
Pursuant to General Instruction G(3), the information regarding our executive officers called for by Item 401(b) of Regulation
S-K is hereby included in Part I of this joint Annual Report on Form 10-K.
The following table below sets forth the name, age and title of each of our executive officers. Titles listed relate to positions within Carnival Corporation and Carnival plc unless otherwise noted. All the Carnival plc
positions were effective as of April 17, 2003, except as noted below.
NAME AGE POSITION
---- --- --------
Micky Arison 57 Chairman of the Board of Directors and
Chief Executive Officer
Gerald R. Cahill 55 Executive Vice President and Chief Financial
and Accounting Officer
Robert H. Dickinson 64 President and Chief Executive Officer of
Carnival Cruise Lines and Director
Pier Luigi Foschi 60 Chairman and Chief Executive Officer of
Costa Crociere, S.p.A. and Director
Howard S. Frank 65 Vice Chairman of the Board of Directors and
Chief Operating Officer
Stein Kruse 48 President and Chief Executive Officer of
Holland America Line Inc. ("HAL")
Arnaldo Perez 46 Senior Vice President, General Counsel
and Secretary
Peter G. Ratcliffe 58 Chief Executive Officer of P&O Princess
Cruises International and Director
NAME | AGE | TITLE | ||
Micky Arison | 60 | Chairman of the Board of Directors and Chief Executive Officer | ||
David Bernstein | 52 | Senior Vice President and Chief Financial Officer | ||
Alan B. Buckelew | 61 | President and Chief Executive Officer of Princess Cruises | ||
Gerald R. Cahill | 58 | President and Chief Executive Officer of Carnival Cruise Lines | ||
David Dingle | 52 | Chief Executive Officer of Carnival UK | ||
Pier Luigi Foschi | 63 | Chairman and Chief Executive Officer of Costa Crociere, S.p.A. and Director | ||
Howard S. Frank | 68 | Vice Chairman of the Board of Directors and Chief Operating Officer | ||
Larry Freedman | 58 | Chief Accounting Officer and Vice President-Controller | ||
Stein Kruse | 51 | President and Chief Executive Officer of Holland America Line Inc. | ||
Arnaldo Perez | 49 | Senior Vice President, General Counsel and Secretary |
Business Experience of Executive Officers
Micky Arison has been Chairman of the Board of Directors since October 1990 and a director since June 1987. He has been Chief Executive Officer since 1979. Mr. Arison has been employed by us for 3538 years.
34
David Bernstein has been Senior Vice President and Chief Financial Officer since July 2007. From July 2003 to July 2007, he was Vice President and Treasurer. From June 1998 to July 2003, he was Chief Financial Officer of Cunard and Seabourn. Mr. Bernstein has been employed by us for 11 years.
Alan B. Buckelew has been Chief Executive Officer of Princess since June 2007. He has been President of Princess from February 2004. From October 2004 to June 2007, he was Chief Operating Officer of Cunard. From October 2000 to January 2004, he was Executive Vice President and Chief Financial Officer of Princess. Mr. Buckelew has been employed by us or Carnival plc predecessor companies for 32 years.
Gerald R. Cahill has been President and Chief Executive Officer of Carnival Cruise Lines since July 2007. From December 2003 to June 2007, he was Executive Vice President and Chief Financial and Accounting Officer since December 2003.Officer. From January 1998 to November 2003 he was Senior Vice President Finance, Chief Financial and Accounting Officer. Mr. Cahill has been employed by us for 1215 years.
Robert H. Dickinson
David Dingle has been a director since June 1987. Mr. Dickinson has
been President and Chief Executive Officer of Carnival Cruise LinesUK, whose brands include P&O Cruises, Ocean Village and Cunard, since May
2003. HeJune 2007. In addition, he has also been Chairman of the Carnival plc Management Committee with responsibility for Carnival Australia since June 2007. From April 2003 to June 2007, he was President and Chief Operating OfficerManaging Director of Carnival Cruise Lines from
May 1993UK and P&O Cruises. From June 2000 to May 2003.April 2003, he was Managing Director of P&O Cruises. Mr. DickinsonDingle has been employed by us or Carnival plc predecessor companies for 3531 years.
Pier Luigi Foschi has been a director since April 2003. He has been Chief Executive Officer of Costa Crociere, S.p.A. since October 1997 and Chairman of its Board since January 2000. In this capacity, Mr. Foschi has had responsibility for AIDA since April 2003 and Ibero since September 2007. Mr. Foschi has been employed by us for nine12 years.
41
Howard S. Frank has been Vice Chairman of the Board of Directors since October 1993, Chief Operating Officer since January 1998 and a director since April 1992. Mr. Frank has been employed by us for 1720 years.
Larry Freedman has been Chief Accounting Officer since July 2007 and Vice President-Controller since April 1998. From April 1998 to June 2007, Mr. Freedman was also Vice President – Finance. Mr. Freedman has been employed by us for 11 years.
Stein Kruse has been the President and Chief Executive Officer of HALHolland America Line since December 2004. From November 2003 to November 2004, he was the President and Chief Operating Officer of HAL.Holland America Line. From SeptemberOctober 1999 to October 2003, he was Senior Vice President, Fleet Operations for HAL. From June 1997 to August 1999
he was Senior Vice President and Chief Financial Officer for "K" LineHolland America Inc.Line. Mr. Kruse has been employed by us for seven10 years.
Arnaldo Perez has been Senior Vice President, General Counsel and Secretary since March 2002. From August 1995 to February 2002 he was Vice President, General Counsel and Secretary. Mr. Perez has been employed by us for 1417 years.
Peter G. Ratcliffe has been a director since April 2003 and a director of
Carnival plc since October 2000. He is Chief Executive Officer of P&O Princess
Cruises International, and is primarily responsible for the operations of
Cunard, Ocean Village, P&O Cruises, P&O Cruises Australia, Princess and Swan
Hellenic. He was Carnival plc's Chief Executive Officer until April 2003. He was
previously an executive director of The Peninsular and Oriental Steam Navigation
Company and head of its cruise division, having served as President of Princess
since 1993 and its Chief Operating Officer since 1989. Mr. Ratcliffe has been
employed by us or Carnival plc predecessor companies for 33 years.
PART II
Item 5. Market for Registrants' Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities.
A. Market Information
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 joint Annual Report on Form 10-K.
B. Holders
B. | Holders |
The information required by Item 201(b) of Regulation S-K, Holders, of
Common Stock, is shown in Exhibit 13 and is incorporated by reference into this joint Annual Report on Form 10-K.
C. Dividends
C. | Dividends |
Carnival Corporation and Carnival plc declared cash dividends on all of their common stock and ordinary shares, respectively, in the amount of:
Quarters Ended
-------------------------------------------------------
February 28 May 31 August 31 November 30
----------- ------ --------- -----------
2007 $0.275
2006 $ 0.25 $0.25 $0.25 $0.275
2005 $ 0.15 $0.20 $0.20 $ 0.25
35
Quarters Ended | ||||||||||||
February 28/29 | May 31 | August 31 | November 30 | |||||||||
2010 | $ | 0.10 | ||||||||||
2009 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | ||||
2008 | $ | 0.40 | $ | 0.40 | $ | 0.40 | $ | 0.40 |
All dividends for both Carnival Corporation and Carnival plc are declared in U.S. dollars. HoldersIf declared, holders of Carnival Corporation common stock orand 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 dividenddividends in U.S. dollars. Dividends payable in sterling will be converted from U.S. dollars into sterling at the dollar/U.S. dollar to sterling exchange rate quoted by the Bank of England in London at the
12:00 p.m. foreign exchange rate on the next combined U.S. and UK business day that follows the quarter end.
Payment
Maintenance of future dividends on Carnival Corporation common stocka strong balance sheet, which enhances our financial flexibility, has always been and Carnival plc ordinary shares will depend upon, among other factors,continues to be the primary objective of our earnings,capital structure policy. We believe preserving cash and liquidity is a prudent step to take during uncertain times to achieve this objective. Accordingly in October 2008 at the height of the financial condition and capital requirements. crisis, the Boards of Directors voted to suspend our quarterly dividend beginning March 2009. However, at the January 2010 Boards of Directors meetings it was decided to reinstate our March 2010 quarterly dividend at $0.10 per share.
The payment and amount of any future dividend is within the discretion of the Boards of Directors,Directors. Our dividends were and it is
possible thatwill be based on a number of factors, including our earnings, liquidity position, financial condition, tone of business, capital requirements, credit ratings and the timingavailability and amountcost of any dividend may vary from the levels
discussed above.obtaining new debt. We cannot be certain that Carnival Corporation and Carnival plc will continue totheir 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 per share dividend increases as were declared in 2006 and
2005 or maintain their current levels.
D. Securities Authorized for Issuance under Equity Compensation Plans
a different timing than are disclosed above.
42
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 joint Annual Report on Form 10-K.
E. Issuer Purchases
E. | Performance Graph |
The information required by Item 201(e) of Equity Securities
During the quarter ended November 30,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 Authorizations |
In June 2006, purchases by Carnival
Corporation of Carnival Corporation's equity securities that are registered by
it pursuant to Section 12 of the Exchange Act were as follows:
In addition to the general repurchase authorization, the Boards of Directors have an expiration date.
Theauthorized the repurchase of up to 19.2 million Carnival plc share repurchase authorization requires annual
shareholder approval. Allordinary shares in the above table were repurchased
pursuantand up to this 2006 Purchase Program. At February 9, 2007 the remaining
availability pursuant to our 2006 Purchase Program was $773 million.
During the year ended November 30, 2006, $69 million of our Zero-Coupon
Notes were converted at their accreted value into 2.125 million shares of Carnival Corporation common stock under the “Stock Swap” programs described below.
At January 28, 2010, the remaining availability under the general repurchase authorization was $787 million and the remaining availability under the “Stock Swap” program repurchase authorizations were 18.1 million Carnival plc ordinary shares and 19.2 million Carnival Corporation shares. All Carnival plc ordinary share repurchases under both the general repurchase authorization and the “Stock Swap” authorizations require annual shareholder approval. The existing shareholder approval is limited to a maximum of which 1.921.3 million were issued from treasury stock.
The issuance was exempt from registration under Section 3(a)(9)ordinary shares and is valid until the earlier of the Securities Actconclusion of 1933, as amended.
Each sharethe Carnival plc 2010 annual general meeting, or October 14, 2010. It is not our present intention to repurchase shares of Carnival Corporation common stock issuedor Carnival plc ordinary shares under the general repurchase authorization, except for any repurchases made with net proceeds resulting from our “Stock Swap” programs described below.
II. | “Stock Swap” Programs; Use of Proceeds |
We use the “Stock Swap” programs in situations where we can obtain an economic benefit because either Carnival Corporation common stock or Carnival plc ordinary shares are trading at a price that is pairedat a premium or discount to the price of Carnival plc ordinary shares or Carnival Corporation common stock, as the case may be.
In the event Carnival Corporation common stock trades at a premium to Carnival plc ordinary shares, we may elect to issue and sell Carnival Corporation common stock through an “At The Market” equity offering (“ATM Offering”) with a
trust share of beneficial interestMerrill Lynch, Pierce, Fenner & Smith, Incorporated (“Merrill Lynch”) as sales agent, and use the sale proceeds to repurchase Carnival plc ordinary shares in the P&O Princess Special Voting Trust,UK market on at least an equivalent basis, with the remaining net proceeds used for general corporate purposes. In the ATM Offering, Carnival Corporation may issue and sell up to 19.2 million of its common stock in the U.S. market, which holdsshares are to be sold from time to time at prevailing market prices in ordinary brokers’ transactions by Merrill Lynch. Any sales of Carnival Corporation shares have been and will be registered under the Securities Act. On October 31, 2008, we filed a Special Voting Share issuedprospectus supplement to the base prospectus contained in our shelf registration statement on Form S-3ASR (File No. 333-132306-01) relating to the ATM Offering. Such shelf registration statement became effective upon filing with the SEC on March 9, 2006 and expired in March 2009. On March 11, 2009, we filed a new joint shelf registration statement with the SEC (File No. 333-157861), which became effective upon filing.
In the event Carnival Corporation common stock trades at a discount to Carnival plc ordinary shares, we may elect to sell existing ordinary shares of Carnival plc, with such sales made by Carnival plcInvestments Limited, a subsidiary of Carnival Corporation, and with Merrill Lynch International (“MLI”) as sales agent, from time to time in connection“at the market” transactions, and use the sale proceeds to repurchase Carnival Corporation common stock in the U.S. market on at least an equivalent basis, with the DLC transaction.
Item 6. Selected Financial Data.
remaining net proceeds used for general corporate purposes. In the offering, Carnival Investments Limited may sell up to 25 million Carnival plc ordinary shares in the UK market, which shares are to be sold from time to time at prevailing market prices in ordinary brokers’ transactions by MLI. Any sales of Carnival plc shares have been and will be registered under the Securities Act. On July 2, 2009, Carnival plc filed a shelf registration statement with the SEC to register such sales (File No. 333-160411), which became effective upon filing.
43
Under the “Stock Swap” programs, from December 1, 2008 through February 28, 2009
Carnival Corporation sold 450,000 shares of Carnival Corporation common stock, at an average price of $21.41 per share for gross proceeds of $10 million and paid Merrill Lynch and others fees of $72,000 and $77,000, respectively, for total net proceeds of $9 million. Substantially all of the net proceeds from these sales were used to purchase 450,000 Carnival plc ordinary shares. From March 1, 2009 through January 28, 2010, there were no sales of shares of Carnival Corporation common stock;
and from July 24, 2009 through November 30, 2009
Carnival Investments Limited sold 5.8 million Carnival plc ordinary shares, at an average price of $32.41 per share for gross proceeds of $188 million and paid MLI and others fees of $1.4 million and $419,000, respectively, for total net proceeds of $187 million. Substantially all of the net proceeds of these sales were used to purchase 5.8 million shares of Carnival Corporation common stock.
The purchases of Carnival Corporation common stock during the three months ended November 30, 2009 pursuant to the “Stock Swap” program were as follows:
Period | Total Number of Carnival Corporation Common Stock Purchased | Average Price Paid per Share of Carnival Corporation Common Stock | Maximum Number of Carnival Corporation Common Stock That May Yet Be Purchased Under the Carnival Corporation Stock Swap Program | ||||
September 1, 2009 through September 30, 2009 | 275,000 | $ | 30.30 | 23,225,000 | |||
October 1, 2009 through October 31, 2009 | 1,600,000 | $ | 32.72 | 21,625,000 | |||
November 1, 2009 through November 30, 2009 | 2,425,000 | $ | 31.09 | 19,200,000 | |||
Total | 4,300,000 | $ | 31.64 | ||||
During the quarter ended November 30, 2009, there were no stock repurchases of Carnival Corporation common stock or Carnival plc ordinary shares under the general stock repurchase authorization and no repurchases of Carnival plc ordinary shares under the “Stock Swap” program repurchase authorization.
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 joint Annual Report on
Form 10-K.
36
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
The information required by Item 7. Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations, is shown in Exhibit 13 and is incorporated by reference into this joint Annual Report on Form 10-K.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
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'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations in Exhibit 13 and is incorporated by reference into this joint Annual Report on Form 10-K.
Item 8. Financial Statements and Supplementary Data.
Item 8. | Financial Statements and Supplementary Data. |
The financial statements, together with the report thereon of PricewaterhouseCoopers LLP dated February 12, 2007,January 28, 2010, and the Selected Quarterly Financial Data (Unaudited), are shown in Exhibit 13 and are incorporated by reference into this joint Annual Report on Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. |
None.
Item 9A. Controls and Procedures.
44
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, is recorded, processed, summarized and reported, within the time periods specified in the U.S. Securities and Exchange Commission'sCommission’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 Chief Executive Officer, Chief Operating Officer and Chief Financial
and Accounting Officer have evaluated our disclosure controls and procedures and have concluded, as of November 30, 2006,2009, that they are effective as described above.
Management's
B.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, 2009 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
C.Management’s 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). Under the supervision and with the participation of our management, including our Chief Executive Officer, Chief Operating Officer and Chief Financial and Accounting Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control -– Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission ("(“COSO Framework"Framework”). Based on our evaluation under the COSO Framework, our management concluded that our internal control over financial reporting was effective as of November 30, 2006.
Our management's assessment of2009.
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, 2006 has been audited by
PricewaterhouseCoopers LLP, an independent registered certified public
accounting firm,2009 as stated in their report which is shown in Exhibit 13 and is incorporated by reference into this joint Annual Report on Form 10-K.
Changes in Internal Control over Financial Reporting
During the three months ended November 30, 2006, we continued with our
implementation of a new worldwide accounting system.
37
As a result, there have been changes in our internal control over
financial reporting during the quarter ended November 30, 2006 that have
materially affected or are reasonably likely to materially affect our internal
control over financial reporting.
It should be noted that any system of controls, however well designed and
operated, can provide only reasonable, and not absolute, assurance that the
objectives of the system will be met. In addition, the design of any control
system is based in part upon certain assumptions about the likelihood of future
events. Because of these and other inherent limitations of control systems,
there is only reasonable assurance that our controls will succeed in achieving
their goals under all potential future conditions.
Item 9B. Other Information.
Item 9B. | Other Information. |
None.
PART III
Items 10, 11, 12, 13 and 14. Directors and Executive Officers of the
Registrants, Executive Compensation, Security Ownership of Certain
Beneficial Owners and Management and Related Stockholder Matters,
Certain Relationships and Related Transactions, and Principal
Accounting Fees and Services.
The information required by Items 10, 11, 12, 13 and 14 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
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 joint Annual Report on
Form 10-K.
Item 10. | Directors, Executive Officers and Corporate Governance. |
We have adopted a code of ethics that applies to our chief executive officer, chief operating officer and senior financial officers, including the principalchief financial andofficer, chief accounting officer and controller and other persons performing similar functions. This code of 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 10 of Form 8-K regarding an amendment to, or waiver from, a provision of this code of ethics by posting such information on our website, at the addresses specified above. Information contained in our website, whether currently posted or posted in the future, is not part of this document or the documents incorporated by reference in this document.
45
The additional information required by Item 10 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 2009 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.
Item 11. | Executive Compensation. |
The information required by Item 11 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 2009 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, 2009.
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | ||||||
(a) | |||||||||
Equity compensation plans approved by | 14,110,494 | (1) | $ | 42.65 | 27,041,116 | (2)(3) | |||
Equity compensation plans not approved | |||||||||
Total | 14,110,494 | $ | 42.65 | 27,041,116 | |||||
(1) | Includes outstanding options to purchase Carnival Corporation common stock under the Carnival Cruise Lines, Inc. 1987 Stock Option Plan, Carnival Corporation 1992 Stock Option Plan, Carnival Corporation 2002 Stock Plan, Carnival Corporation 1993 Outside Directors’ Stock Option Plan and Carnival Corporation 2001 Outside Director Stock Plan. Also includes 1,516,171 restricted share units outstanding under the Carnival Corporation 2002 Stock Plan and 33,441 restricted share units outstanding under the Carnival Corporation 2001 Outside Director Stock Plan. |
(2) | Includes Carnival Corporation common stock available for issuance as of November 30, 2009 as follows: 2,519,431 under the Carnival Corporation Employee Stock Purchase Plan, which includes 20,646 shares subject to purchase during the current purchase period, 23,944,428 under the Carnival Corporation 2002 Stock Plan and 577,257 under the Carnival Corporation 2001 Outside Director Stock Plan. |
(3) | In addition to options, the Carnival Corporation 2002 Stock Plan and the Carnival Corporation 2001 Outside Director Stock Plan provide for the award of restricted shares and restricted share units without limitation on the number of shares than can be awarded in either form. |
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, 2009.
46
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights (1) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | ||||||
(a) | |||||||||
Equity compensation plans approved by | 3,642,416 | (2) | $ | 42.05 | 12,546,056 | (3) | |||
Equity compensation plans not approved | |||||||||
Total | 3,642,416 | $ | 42.05 | 12,546,056 | |||||
(1) | Converted from sterling, if applicable, using the November 30, 2009 exchange rate of $1.65:£1. |
(2) | Includes outstanding options to purchase Carnival plc ordinary shares under the Carnival plc Executive Share Option Plan and Carnival plc 2005 Employee Share Plan. Also includes 857,041 restricted share units outstanding under the Carnival plc 2005 Employee Share Plan. |
(3) | In addition to options, the Carnival plc 2005 Employee Share Plan provides for the award of restricted shares and restricted share units without limitation on the number of shares that can be awarded in either form. |
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 2009 fiscal year.
Items 13 and 14. | Certain Relationships and Related Transactions, and Director Independence and Principal Accounting Fees and Services. |
The information required by Items 13 and 14 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 2009 fiscal year.
PART IV
Item 15. Exhibits, Financial Statement Schedules.
Item 15. | Exhibits, Financial Statement Schedules. |
(a) (1) Financial Statements
The financial statements shown in Exhibit 13 are incorporated herein by reference into this joint Annual Report on Form 10-K.
(2) Financial Statement Schedules
(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
(3) | Exhibits |
The exhibits listed on the accompanying Index to Exhibits are filed or incorporated by reference as part of this joint Annual Report on Form 10-K and such Index to Exhibits is hereby incorporated herein by reference.
38
47
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/ Micky Arison /s/ Micky Arison
- ---------------- ----------------
Micky Arison Micky Arison
Chairman of the Board of Chairman of the Board of
Directors and Chief Executive Officer Directors and Chief Executive Officer
February 12, 2007 February 12, 2007
CARNIVAL CORPORATION | CARNIVAL PLC | |
/s/ Micky Arison | /s/ Micky Arison | |
Micky Arison | Micky Arison | |
Chairman of the Board of Directors and Chief Executive Officer | Chairman of the Board of Directors and Chief Executive Officer | |
January 29, 2010 | January 29, 2010 |
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/ Micky Arison /s/ Micky Arison
- ---------------- ----------------
Micky Arison Micky Arison
Chairman of the Board of Chairman of the Board of
Directors and Chief Executive Officer Directors and Chief Executive Officer
February 12, 2007 February 12, 2007
/s/ Howard S. Frank /s/ Howard S. Frank
- ------------------- -------------------
Howard S. Frank Howard S. Frank
Vice Chairman of the Board of Vice Chairman of the Board of
Directors and Chief Operating Officer Directors and Chief Operating Officer
February 12, 2007 February 12, 2007
/s/ Gerald R. Cahill /s/ Gerald R. Cahill
- -------------------- --------------------
Gerald R. Cahill Gerald R. Cahill
Executive Vice President Executive Vice President
and Chief Financial and and Chief Financial and
Accounting Officer Accounting Officer
February 12, 2007 February 12, 2007
/s/ *Richard G. Capen, Jr. /s/ *Richard G. Capen, Jr.
- -------------------------- --------------------------
Richard G. Capen, Jr. Richard G. Capen, Jr.
Director Director
February 12, 2007 February 12, 2007
/s/ *Robert H. Dickinson /s/ *Robert H. Dickinson
- ------------------------ ------------------------
Robert H. Dickinson Robert H. Dickinson
Director Director
February 12, 2007 February 12, 2007
/s/ *Arnold W. Donald /s/ *Arnold W. Donald
- --------------------- ---------------------
Arnold W. Donald Arnold W. Donald
Director Director
February 12, 2007 February 12, 2007
/s/ *Pier Luigi Foschi /s/ *Pier Luigi Foschi
- ---------------------- ----------------------
Pier Luigi Foschi Pier Luigi Foschi
Director Director
February 12, 2007 February 12, 2007
/s/ *Richard J. Glasier /s/ *Richard J. Glasier
- ----------------------- -----------------------
Richard J. Glasier Richard J. Glasier
Director Director
February 12, 2007 February 12, 2007
39
/s/ *Baroness Sarah Hogg /s/ *Baroness Sarah Hogg
- ------------------------ ------------------------
Baroness Hogg Baroness Hogg
Director Director
February 12, 2007 February 12, 2007
/s/ *A. Kirk Lanterman /s/ *A. Kirk Lanterman
- ---------------------- ----------------------
A. Kirk Lanterman A. Kirk Lanterman
Director Director
February 12, 2007 February 12, 2007
/s/ *Modesto A. Maidique /s/ *Modesto A. Maidique
- ------------------------ ------------------------
Modesto A. Maidique Modesto A. Maidique
Director Director
February 12, 2007 February 12, 2007
/s/ *Sir John Parker /s/ *Sir John Parker
- -------------------- --------------------
Sir John Parker Sir John Parker
Director Director
February 12, 2007 February 12, 2007
/s/ *Peter G. Ratcliffe /s/ *Peter G. Ratcliffe
- ----------------------- -----------------------
Peter G. Ratcliffe Peter G. Ratcliffe
Director Director
February 12, 2007 February 12, 2007
/s/ *Stuart Subotnick /s/ *Stuart Subotnick
- --------------------- ---------------------
Stuart Subotnick Stuart Subotnick
Director Director
February 12, 2007 February 12, 2007
/s/ *Laura Weil /s/ *Laura Weil
- --------------- ---------------
Laura Weil Laura Weil
Director Director
February 12, 2007 February 12, 2007
/s/ *Uzi Zucker /s/ *Uzi Zucker
- --------------- ---------------
Uzi Zucker Uzi Zucker
Director Director
February 12, 2007 February 12, 2007
*By: /s/ Arnaldo Perez *By: /s/ Arnaldo Perez
- ---------------------- ----------------------
(Arnaldo Perez (Arnaldo Perez
Attorney-in-fact) Attorney-in-fact)
February 12, 2007 February 12, 2007
40
CARNIVAL CORPORATION | CARNIVAL PLC | |
/s/ Micky Arison | /s/ Micky Arison | |
Micky Arison | Micky Arison | |
Chairman of the Board of Directors and Chief Executive Officer | Chairman of the Board of Directors and Chief Executive Officer | |
January 29, 2010 | January 29, 2010 | |
/s/ Howard S. Frank | /s/ Howard S. Frank | |
Howard S. Frank | Howard S. Frank | |
Vice Chairman of the Board of Directors and Chief Operating Officer | Vice Chairman of the Board of Directors and Chief Operating Officer | |
January 29, 2010 | January 29, 2010 | |
/s/ David Bernstein | /s/ David Bernstein | |
David Bernstein | David Bernstein | |
Chief Financial Officer | Chief Financial Officer | |
January 29, 2010 | January 29, 2010 | |
/s/ Larry Freedman | /s/ Larry Freedman | |
Larry Freedman | Larry Freedman | |
Chief Accounting Officer | Chief Accounting Officer | |
January 29, 2010 | January 29, 2010 | |
/s/*Richard G. Capen, Jr. | /s/*Richard G. Capen, Jr. | |
Richard G. Capen, Jr. | Richard G. Capen, Jr. | |
Director | Director | |
January 29, 2010 | January 29, 2010 | |
/s/*Robert H. Dickinson | /s/*Robert H. Dickinson | |
Robert H. Dickinson | Robert H. Dickinson | |
Director | Director | |
January 29, 2010 | January 29, 2010 | |
/s/*Arnold W. Donald | /s/*Arnold W. Donald | |
Arnold W. Donald | Arnold W. Donald | |
Director | Director | |
January 29, 2010 | January 29, 2010 | |
/s/*Pier Luigi Foschi | /s/*Pier Luigi Foschi | |
Pier Luigi Foschi | Pier Luigi Foschi | |
Director | Director | |
January 29, 2010 | January 29, 2010 | |
/s/*Richard J. Glasier | /s/*Richard J. Glasier | |
Richard J. Glasier | Richard J. Glasier | |
Director | Director | |
January 29, 2010 | January 29, 2010 |
48
/s/*Modesto A. Maidique | /s/*Modesto A. Maidique | |
Modesto A. Maidique | Modesto A. Maidique | |
Director | Director | |
January 29, 2010 | January 29, 2010 | |
/s/*Sir John Parker | /s/*Sir John Parker | |
Sir John Parker | Sir John Parker | |
Director | Director | |
January 29, 2010 | January 29, 2010 | |
/s/*Peter G. Ratcliffe | /s/*Peter G. Ratcliffe | |
Peter G. Ratcliffe | Peter G. Ratcliffe | |
Director | Director | |
January 29, 2010 | January 29, 2010 | |
/s/*Stuart Subotnick | /s/*Stuart Subotnick | |
Stuart Subotnick | Stuart Subotnick | |
Director | Director | |
January 29, 2010 | January 29, 2010 | |
/s/*Laura Weil | /s/*Laura Weil | |
Laura Weil | Laura Weil | |
Director | Director | |
January 29, 2010 | January 29, 2010 | |
/s/*Randall J. Weisenburger | /s/*Randall J. Weisenburger | |
Randall J. Weisenburger | Randall J. Weisenburger | |
Director | Director | |
January 29, 2010 | January 29, 2010 | |
/s/*Uzi Zucker | /s/*Uzi Zucker | |
Uzi Zucker | Uzi Zucker | |
Director | Director | |
January 29, 2010 | January 29, 2010 | |
*By: /s/ Arnaldo Perez | *By:/s/ Arnaldo Perez | |
Arnaldo Perez | Arnaldo Perez | |
(Attorney-in-fact) | (Attorney-in-fact) | |
January 29, 2010 | January 29, 2010 |
49
INDEX TO EXHIBITS
Page No. in
Sequential
Numbering
System
Exhibits
3.1-Third Amended and Restated Articles of Incorporation of Carnival
Corporation, incorporated by reference to Exhibit No. 3.1 to the joint Current
Report on Form 8-K of Carnival Corporation and Carnival plc filed on April 17,
2003.
3.2-Amended and Restated By-laws of Carnival Corporation, incorporated by
reference to Exhibit No. 3.2 to the joint Current Report on Form 8-K of
Carnival Corporation and Carnival plc filed on April 17, 2003.
3.3-Articles of Association of Carnival plc, incorporated by reference to
Exhibit No. 3.3 to the joint Current Report on Form 8-K of Carnival Corporation
and Carnival plc filed on April 17, 2003.
3.4-Memorandum of Association of Carnival plc, incorporated by reference to
Exhibit No. 3.4 to the joint Current Report on Form 8-K of Carnival Corporation
and Carnival plc filed on April 17, 2003.
4.1-Agreement of Carnival Corporation and Carnival plc, dated February 7, 2007
to furnish certain debt instruments to the Securities and Exchange Commission.
4.2-Carnival Corporation Deed, dated April 17, 2003, between Carnival
Corporation and P&O Princess Cruises plc for the benefit of the P&O Princess
Shareholders, incorporated by reference to Exhibit No. 4.1 to our joint
Quarterly Report on Form 10-Q for the quarter ended August 31, 2003.
4.3-Equalization and Governance Agreement, dated April 17, 2003, between
Carnival Corporation and P&O Princess Cruises plc, incorporated by reference to
Exhibit No. 4.2 to our joint Quarterly Report on Form 10-Q of Carnival
Corporation and Carnival plc for the quarter ended August 31, 2003.
4.4-Carnival Corporation Deed of Guarantee, dated as of April 17, 2003, between
Carnival Corporation and Carnival plc, incorporated by reference to Exhibit No.
4.3 to the joint registration statement on Form S-4 of Carnival Corporation and
Carnival plc.
4.5-Carnival plc (formerly P&O Princess Cruises plc) Deed of Guarantee, dated
as of April 17, 2003, between Carnival Corporation and Carnival plc,
incorporated by reference to Exhibit No. 4.10 to the joint registration
statement on Form S-3 and F-3 of Carnival Corporation, Carnival plc and P&O
Princess Cruises International Ltd. ("POPCIL").
4.6-Specimen Common Stock Certificate, incorporated by reference to Exhibit No.
4.16 to the joint registration statement on Form S-3 and F-3 of Carnival
Corporation, Carnival plc and POPCIL.
4.7-Pairing Agreement, dated as of April 17, 2003, between Carnival
Corporation, The Law Debenture Trust Corporation (Cayman) Limited, as trustee,
and Computershare Investor Services (formerly SunTrust Bank), as transfer
agent, incorporated by reference to the joint Current Report on Form 8-K of
Carnival Corporation and Carnival plc filed on April 17, 2003.
4.8-Voting Trust Deed, dated as of April 17, 2003, between Carnival Corporation
and The Law Debenture Trust Corporation (Cayman) Limited, as trustee,
incorporated by reference to the joint Current Report on Form 8-K of Carnival
Corporation and Carnival plc filed on April 17, 2003.
4.9-SVE Special Voting Deed, dated as of April 17, 2003, between Carnival
Corporation, DLS SVC Limited, P&O Princess Cruises plc, The Law Debenture Trust
Corporation (Cayman) Limited, as trustee, and The Law Debenture Trust
Corporation, P.L.C., incorporated by reference to the joint Current Report on
Form 8-K of Carnival Corporation and Carnival plc filed on April 17, 2003.
4.10-Form of deposit agreement among P&O Princess Cruises plc, Morgan Guaranty
Trust Company of New York, as depositary, and holders and beneficial owners
from time to time of ADRs issued thereunder, incorporated by reference to P&O
Princess' Cruises registration statement on Form 20-F.
41
4.11-Indenture, dated as of April 25, 2001, between Carnival Corporation and
U.S. Bank Trust National Association, as trustee, relating to unsecured and
unsubordinated debt securities, incorporated by reference to Exhibit No. 4.5 to
Carnival Corporation registration statement on Form S-3.
4.12-Form of Indenture, dated March 1, 1993, between Carnival Cruise Lines,
Inc. and First Trust National Association, as Trustee, relating to the Debt
Securities, including form of Debt Security, incorporated by reference to
Exhibit No. 4 to Carnival Corporation registration statement on Form S-3.
4.13-Second Supplemental Indenture, dated December 1, 2003, between Carnival
plc and Carnival Corporation to The Bank of New York, as Trustee, relating to
7.30% Notes due 2007 and 7.875% debentures due 2027 incorporated by reference
to Exhibit No. 4.14 to our joint Annual Report on Form 10-K for the year ended
November 30, 2003.
*10.1-Retirement and Consulting Agreement, dated November 28, 2003, between
Alton Kirk Lanterman, Carnival Corporation, Holland America Line Inc., and
others, incorporated by reference to Exhibit No. 10.1 to our joint Annual
Report on Form 10-K for the year ended November 30, 2003.
*10.2-Amendment to the Amended and Restated Carnival Corporation 1992 Stock
Option Plan, incorporated by reference to Exhibit No. 10.2 to our joint Annual
Report on Form 10-K for the year ended November 30, 2003.
10.3-Facilities Agreement dated October 21, 2005, between Carnival Corporation,
Carnival plc, and certain of Carnival Corporation and Carnival plc
subsidiaries, The Royal Bank of Scotland as facilities agent and a syndicate of
financial institutions incorporated by reference to Exhibit 10.3 to our joint
Annual Report on Form 10-K for the year ended November 30, 2005.
*10.4-Amended and Restated Carnival Corporation 1992 Stock Option Plan,
incorporated by reference to Exhibit No. 10.4 to our Annual Report on Form 10-K
for the year ended November 30, 1997.
*10.5-Carnival Cruise Lines, Inc. 1993 Restricted Stock Plan adopted on January
15, 1993 and as amended January 5, 1998 and December 21, 1998, incorporated by
reference to Exhibit No. 10.5 to our Annual Report on Form 10-K for the year
ended November 30, 1998.
*10.6-Carnival Corporation "Fun Ship" Nonqualified Savings Plan, incorporated by
reference to Exhibit No. 10.6 to our Annual Report on Form 10-K for the year
ended November 30, 1997.
*10.7-Amendments to the Carnival Corporation Nonqualified Retirement Plan for
Highly Compensated Employees, incorporated by reference to Exhibit No. 10.7 to
our Annual Report on Form 10-K for the year ended November 30, 1997.
*10.8-Carnival Cruise Lines, Inc. Non-Qualified Retirement Plan, incorporated by
reference to Exhibit No. 10.4 to our Annual Report on Form 10-K for the year
ended November 30, 1990.
*10.9-Executive Long-term Compensation Agreement, dated as of January 16, 1998,
between Robert H. Dickinson and Carnival Corporation, incorporated by reference
to Exhibit No. 10.2 to our Annual Report on Form 10-K for the year ended
November 30, 1997.
*10.10-Consulting Agreement/Registration Rights Agreement, dated June 14, 1991,
between Carnival Corporation and Ted Arison, incorporated by reference to
Exhibit No. 4.3 to post- effective amendment no. 1 on Form S-3 to Carnival
Corporation's registration statement on Form S-1.
*10.11-First Amendment to Consulting Agreement/Registration Rights Agreement
between Carnival Corporation and Ted Arison, incorporated by reference to
Exhibit No. 10.40 to Carnival Corporation's Annual Report on Form 10-K for the
year ended November 30, 1992.
*10.12-Director Appointment Letter between Peter G. Ratcliffe and Carnival plc,
incorporated by reference to Exhibit No. 10.23 to our joint Quarterly Report on
Form 10-Q for the quarter ended May 31, 2003.
42
*10.13-Director Appointment Letter, dated August 19, 2004, between Baroness
Sarah Hogg and each of Carnival Corporation and Carnival plc, incorporated by
reference to Exhibit No. 10.13 to our joint Annual Report on Form 10-K for the
year ended November 30, 2004.
*10.14-Director's Appointment Letter, dated August 19, 2004, between Richard J.
Glasier and each of Carnival Corporation and Carnival plc, incorporated by
reference to Exhibit No. 10.14 to our joint Annual Report on Form 10-K for the
year ended November 30, 2004.
*10.15-Director Appointment Letter, dated August 19, 2004, between Sir John
Parker and each of Carnival Corporation and Carnival plc, incorporated by
reference to Exhibit No. 10.15 to our joint Annual Report on Form 10-K for the
year ended November 30, 2004.
*10.16-Amended and Restated Carnival plc 2005 Employee Share Plan, incorporated
by reference to Exhibit No. 10.2 to our joint Quarterly Report on Form 10-Q for
the quarter ended August 31, 2005.
*10.17-Executive Long-term Compensation Agreement, dated January 11, 1999,
between Carnival Corporation and Micky Arison, incorporated by reference to
Exhibit No. 10.36 to Carnival Corporation's Annual Report on Form 10-K for the
year ended November 30, 1998.
*10.18-Executive Long-term Compensation Agreement, dated January 11, 1999,
between Carnival Corporation and Howard S. Frank, incorporated by reference to
Exhibit No. 10.37 to Carnival Corporation's Annual Report on Form 10-K for the
year ended November 30, 1998.
*10.19-Carnival Corporation Supplemental Executive Retirement Plan, incorporated
by reference to Exhibit No. 10.32 to Carnival Corporation's Annual Report on
Form 10-K for the year ended November 30, 1999.
*10.20-Amendment to the Carnival Corporation Supplemental Executive Retirement
Plan, incorporated by reference to Exhibit No. 10.31 to Carnival Corporation's
Annual Report on Form 10-K for the year ended November 30, 2000.
*10.21-Amendment to the Carnival Corporation "Fun Ship" Nonqualified Savings
Plan, incorporated by reference to Exhibit No. 10.33 to Carnival Corporation's
Annual Report on Form 10-K for the year ended November 30, 1999.
*10.22-Amendment to the Carnival Corporation Nonqualified Retirement Plan for
Highly Compensated Employees, incorporated by reference to Exhibit No. 10.33 to
Carnival Corporation's Annual Report on Form 10-K for the year ended November
30, 2000.
*10.23-Amendment to the Carnival Corporation "Fun Ship" Nonqualified Savings
Plan, incorporated by reference to Exhibit No. 10.34 to Carnival Corporation's
Annual Report on Form 10-K for the year ended November 30, 2000.
*10.24-Amendment to the Carnival Corporation "Fun Ship" Nonqualified Savings
Plan, incorporated by reference to Exhibit No. 10.37 to Carnival Corporation's
Annual Report on Form 10-K for the year ended November 30, 2001.
*10.25-Amendment to the Carnival Corporation Nonqualified Retirement Plan for
Highly Compensated Employees, incorporated by reference to Exhibit No. 10.38 to
Carnival Corporation's Annual Report on Form 10-K for the year ended November
30, 2001.
*10.26-Amended and Restated Carnival Corporation 2001 Outside Director Stock
Plan, incorporated by reference to Exhibit No. 10.1 to our joint Quarterly
Report on Form 10-Q for the quarter ended May 31, 2005.
*10.27-Amended and Restated Carnival Corporation 2002 Stock Plan, incorporated
by reference to Exhibit No. 10.1 to our joint Quarterly Report on Form 10-Q for
the quarter ended May 31, 2003.
*10.28-Agreement with Pier Luigi Foschi, incorporated by reference to Exhibit
No. 10.4 to our joint Quarterly Report on Form 10-Q for the quarter ended
August 31, 2005.
10.29-Succession Agreement, dated as of May 28, 2002, to Registration Rights
Agreement, dated June 14, 1991, between Carnival Corporation and Ted Arison,
incorporated by reference to Exhibit No. 10.3 to Carnival Corporation's
Quarterly Report on Form 10-Q for the quarter ended May 31, 2002.
43
*10.30-Employment Agreement, dated as of April 17, 2003, by and between POPCIL
and Peter Ratcliffe, incorporated by reference to Exhibit No. 10.2 to our joint
Quarterly Report on Form 10-Q for the quarter ended May 31, 2003.
*10.31-Carnival Corporation & plc Non-Executive Board of Director Cruise Benefit
Policy, incorporated by reference to Exhibit No. 10.1 to our joint Quarterly
Report on Form 10-Q for the quarter ended August 31, 2005.
*10.32-Indemnification Agreement, dated April 17, 2003, between Micky M. Arison
and Carnival Corporation, incorporated by reference to Exhibit No. 10.5 to our
joint Quarterly Report on Form 10-Q for the quarter ended May 31, 2003.
*10.33-Consulting Agreement, dated November 30, 2004, between A. Kirk Lanterman,
Holland America Line Inc. and others, incorporated by reference to our joint
Current Report on Form 8-K, dated December 6, 2004.
*10.34-Indemnification Agreement, dated April 17, 2003, between Robert H.
Dickinson and Carnival Corporation, incorporated by reference to Exhibit No.
10.9 to our joint Quarterly Report on Form 10-Q for the quarter ended May 31,
2003.
*10.35-Amendment to the Carnival Corporation Nonqualified Retirement Plan For
Highly Compensated Employees, incorporated by reference to Exhibit No. 10.1 to
our joint Quarterly Report on Form 10-Q for the quarter ended February 28,
2006.
*10.36-Indemnification Agreement, dated April 17, 2003, between Pier Luigi
Foschi and Carnival Corporation, incorporated by reference to Exhibit No. 10.13
to our joint Quarterly Report on Form 10-Q for the quarter ended May 31, 2003.
*10.37-Indemnification Agreement, dated April 17, 2003, between Howard S. Frank
and Carnival Corporation, incorporated by reference to Exhibit No. 10.15 to our
joint Quarterly Report on Form 10-Q for the quarter ended May 31, 2003.
*10.38-Director Appointment Letter, dated December 1, 2004, between A. Kirk
Lanterman and each of Carnival Corporation and Carnival plc, incorporated by
reference to Exhibit No. 10.38 to our joint Annual Report on Form 10-K for the
year ended November 30, 2004.
*10.39-Indemnification Agreement, dated April 17, 2003, between Peter G.
Ratcliffe and Carnival Corporation, incorporated by reference to Exhibit No.
10.24 to our joint Quarterly Report on Form 10-Q for the quarter ended May 31,
2003.
*10.40-Director Appointment Letter, dated April 14, 2003, between Micky M.
Arison and Carnival plc, incorporated by reference to Exhibit No. 10.4 to our
joint Quarterly Report on Form 10-Q for the quarter ended May 31, 2003.
*10.41-Director Appointment Letter, dated August 19, 2004, between Richard G.
Capen and each of Carnival Corporation and Carnival plc, incorporated by
reference to Exhibit No. 10.41 to our joint Annual Report on Form 10-K for the
year ended November 30, 2004.
*10.42-Director Appointment Letter, dated April 14, 2003, between Robert H.
Dickinson and Carnival plc, incorporated by reference to Exhibit No. 10.8 to
our joint Quarterly Report on Form 10-Q for the quarter ended May 31, 2003.
*10.43-Director Appointment Letter, dated August 19, 2004, between Arnold W.
Donald and each of Carnival Corporation and Carnival plc, incorporated by
reference to Exhibit No. 10.43 to our joint Annual Report on Form 10-K for the
year ended November 30, 2004.
*10.44-Director Appointment Letter between Pier Luigi Foschi and Carnival plc,
incorporated by reference to Exhibit No. 10.12 to our joint Quarterly Report on
Form 10-Q for the quarter ended May 31, 2003.
*10.45-Director Appointment Letter, dated April 14, 2003, between Howard S.
Frank and Carnival plc, incorporated by reference to Exhibit No. 10.14 to our
joint Quarterly Report on Form 10-Q for the quarter ended May 31, 2003.
*10.46-Director Appointment Letter, dated August 19, 2004, between Modesto A.
Maidique and each of Carnival Corporation and Carnival plc, incorporated by
reference to Exhibit No. 10.46 to our joint Annual Report on Form 10-K for the
year ended November 30, 2004.
44
*10.47-Amendment No. 1 to the Employment Agreement, dated as of July 19, 2004,
by and between P&O Princess International Ltd. and Peter Ratcliffe incorporated
by reference to Exhibit No. 10.1 to our joint Quarterly Report on Form 10-Q for
the quarter ended August 31, 2004.
*10.48-Director Appointment Letter, dated August 19, 2004, between Stuart
Subotnick and each of Carnival Corporation and Carnival plc, incorporated by
reference to Exhibit No. 10.48 to our joint Annual Report on Form 10-K for the
year ended November 30, 2004.
*10.49-Director Appointment Letter, dated August 19, 2004, between Uzi Zucker
and each of Carnival Corporation and Carnival plc, incorporated by reference to
Exhibit No. 10.49 to our joint Annual Report on Form 10-K for the year ended
November 30, 2004.
*10.50-Amendment of the Carnival Corporation "Fun Ship" Nonqualified Savings
Plan, incorporated by reference to Exhibit No. 10.1 to our Quarterly Report on
Form 10-Q for the quarter ended February 28, 2003.
*10.51-Amendment of the Carnival Corporation Nonqualified Retirement Plan For
Highly Compensated Employees, incorporated by reference to Exhibit No. 10.2 to
our Quarterly Report on Form 10-Q for the quarter ended February 28, 2003.
*10.52-The P&O Princess Cruises Executive Share Option Plan, incorporated by
reference to Exhibit No. 4.9 to P&O Princess' Annual Report on Form 20-F for
the year ended December 30, 2001.
*10.53-The P&O Princess Cruises Deferred Bonus and Co-Investment Matching Plan,
incorporated by reference to Exhibit No. 4.10 to P&O Princess' Annual Report on
Form 20-F for the year ended December 30, 2001.
*10.54-Carnival Cruise Lines Management Incentive Plan, incorporated by
reference to Exhibit No. 10.3 to our joint Quarterly Report on Form 10-Q for
the quarter ended August 31, 2005.
*10.55-Amendment to the Carnival Corporation Supplemental Executive Retirement
Plan, incorporated by reference to Exhibit No. 10.1 to our joint Quarterly
Report on Form 10-Q for the quarter ended February 29, 2004.
*10.56-Amendment to the Carnival Corporation Nonqualified Retirement Plan for
Highly Compensated Employees, incorporated by reference to Exhibit No. 10.1 to
our joint Quarterly Report on Form 10-Q for the quarter ended February 29,
2004.
*10.57-Amendment to the Carnival Corporation "Fun Ship" Nonqualified Savings
Plan, incorporated by reference to Exhibit No. 10.2 to our joint Quarterly
Report on Form 10-Q for the quarter ended February 29, 2004.
*10.58-Amendment to the Carnival Corporation "Fun Ship" Nonqualified Savings
Plan, incorporated by reference to Exhibit No. 10.1 to our joint Quarterly
Report on Form 10-Q for the quarter ended February 28, 2005.
*10.59-Form of Nonqualified Stock Option Agreement for the Amended and Restated
Carnival Corporation 2001 Outside Director Stock Plan, incorporated by
reference to Exhibit No. 10.5 to our joint Quarterly Report on Form 10-Q for
the quarter ended August 31, 2005.
*10.60-Form of Restricted Stock Award Agreement for the Amended and Restated
Carnival Corporation 2001 Outside Director Stock Plan, incorporated by
reference to Exhibit No. 10.6 to our joint Quarterly Report on Form 10-Q for
the quarter ended August 31, 2005.
*10.61-Form of Restricted Stock Unit Award Agreement for the Amended and
Restated Carnival Corporation 2001 Outside Director Stock Plan, incorporated by
reference to Exhibit No. 10.7 to our joint Quarterly Report on Form 10-Q for
the quarter ended August 31, 2005.
*10.62-Form of Share Option Certificate for the Amended and Restated Carnival
plc 2005 Employee Share Plan, incorporated by reference to Exhibit No. 10.8 to
our joint Quarterly Report on Form 10-Q for the quarter ended August 31, 2005.
10.63-Deed of Guarantee, dated October 21, 2005, between Carnival Corporation
as guarantor and the Royal Bank of Scotland plc as facilities agent,
incorporated by reference to Exhibit No. 10.63 to our joint Annual Report on
Form 10-K for the year ended November 30, 2005.
45
10.64-Deed of Guarantee, dated October 21, 2005, between Carnival plc as
guarantor and the Royal Bank of Scotland plc as facilities agent, incorporated
by reference to Exhibit No. 10.64 to our joint Annual Report on Form 10-K for
the year ended November 30, 2005.
*10.65-Corporate Aviation Administrative Policy Statement for the use of
Carnival Corporation & plc aircraft, incorporated by reference to Exhibit No.
10.2 to our joint Quarterly Report on Form 10-Q for the quarter ended February
28, 2006.
*10.66-Form of Restricted Share Unit Award Certificate for the Amended and
Restated Carnival plc 2005 Employee Share Plan, incorporated by reference to
Exhibit No. 10.3 to our joint Quarterly Report on Form 10-Q for the quarter
ended February 28, 2006.
*10.67-Form of Restricted Stock Unit Agreement for the Amended and Restated
Carnival Corporation 2002 Stock Plan, incorporated by reference to Exhibit No.
10.4 to our joint Quarterly Report on Form 10-Q for the quarter ended February
28, 2006.
*10.68-Princes Cruises Chief Executive Officer Supplemental Retirement Plan for
Peter Ratcliffe, incorporated by reference to the joint Current Report on Form
8-K filed on October 20, 2006.
12-Ratio of Earnings to Fixed Charges.
13-Portions of 2006 Annual Report incorporated by reference into 2006 joint
Annual Report on Form 10-K.
21-Significant Subsidiaries of Carnival Corporation and Carnival plc.
23-Consent of Independent Registered Certified Public Accounting Firm.
24.1-Powers of Attorney given by certain Directors of Carnival Corporation and
Carnival plc to Micky Arison, Howard S. Frank, Gerald R. Cahill and Arnaldo
Perez authorizing such persons to sign this 2006 joint Annual Report on Form
10-K and any future amendments on their behalf.
24.2-Power of Attorney given by Laura Weil, a Director of Carnival Corporation
and Carnival plc to Micky Arison, Howard S. Frank, Gerald R. Cahill and Arnaldo
Perez authorizing such persons to sign this 2006 joint Annual Report on Form
10-K and any future amendments on their behalf.
31.1-Certification of Chief Executive Officer of Carnival Corporation pursuant
to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
31.2-Certification of Chief Operating Officer of Carnival Corporation pursuant
to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
31.3-Certification of Executive Vice President and Chief Financial and
Accounting Officer of Carnival Corporation pursuant to Rule 13a-14(a), as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.4-Certification of Chief Executive Officer of Carnival plc pursuant to Rule
13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
31.5-Certification of Chief Operating Officer of Carnival plc pursuant to Rule
13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
31.6-Certification of Executive Vice President and Chief Financial and
Accounting Officer of Carnival plc pursuant to Rule 13a-14(a), as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1-Certification of Chief Executive Officer of Carnival Corporation pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
32.2-Certification of Chief Operating Officer of Carnival Corporation pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
32.3-Certification of Executive Vice President and Chief Financial and
Accounting Officer of Carnival Corporation pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
46
32.4-Certification of Chief Executive Officer of Carnival plc pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
32.5-Certification of Chief Operating Officer of Carnival plc pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
32.6-Certification of Executive Vice President and Chief Financial and
Accounting Officer of Carnival plc pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*Indicates a management contract or compensation plan or arrangement.
47
Incorporated by Reference | ||||||||||
Exhibit | Exhibit Description | Form | Exhibit | Filing | Filed | |||||
Underwriting agreements | ||||||||||
1.1 | ATM Equity OfferingsmSales Agreement, dated as of October 31, 2008, between Carnival Corporation and Merrill Lynch, Pierce, Fenner & Smith Incorporated. | 8-K | 99.2 | 10/31/08 | ||||||
1.2 | Form of Selling Agreement among Carnival Investments Limited, Carnival Corporation, Carnival plc and Merrill Lynch International. | S-3 | 1.1 | 7/2/09 | ||||||
Articles of incorporation and by-laws | ||||||||||
3.1 | Third Amended and Restated Articles of Incorporation of Carnival Corporation. | 8-K | 3.1 | 4/17/03 | ||||||
3.2 | Third Amended and Restated By-Laws of Carnival Corporation. | 8-K | 3.1 | 4/20/09 | ||||||
3.3 | Articles of Association of Carnival plc. | 8-K | 3.3 | 4/20/09 | ||||||
3.4 | Memorandum of Association of Carnival plc. | 8-K | 3.4 | 4/20/09 | ||||||
Instruments defining the rights of security holders, including indentures | ||||||||||
4.1 | Agreement of Carnival Corporation and Carnival plc, dated January 11, 2010 to furnish certain debt instruments to the Securities and Exchange Commission. | X | ||||||||
4.2 | Carnival Corporation Deed, dated April 17, 2003, between Carnival Corporation and P&O Princess Cruises plc for the benefit of the P&O Princess Shareholders. | 10-Q | 4.1 | 8/31/03 | ||||||
4.3 | Equalization and Governance Agreement, dated April 17, 2003, between Carnival Corporation and P&O Princess Cruises plc. | 10-Q | 4.2 | 8/31/03 | ||||||
4.4 | Carnival Corporation Deed of Guarantee, dated as of April 17, 2003, between Carnival Corporation and Carnival plc. | S-4 | 4.3 | 5/30/03 | ||||||
4.5 | Carnival plc Deed of Guarantee, dated as of April 17, 2003, between Carnival Corporation and Carnival plc. | S-3 & F-3 | 4.10 | 6/19/03 |
50
INDEX TO EXHIBITS
Incorporated by Reference | ||||||||||
Exhibit | Exhibit Description | Form | Exhibit | Filing | Filed | |||||
4.6 | Specimen Common Stock Certificate. | S-3 & F-3 | 4.16 | 6/19/03 | ||||||
4.7 | Pairing Agreement, dated as of April 17, 2003, between Carnival Corporation, The Law Debenture Trust Corporation (Cayman) Limited, as trustee, and Computershare Investor Services (formerly SunTrust Bank), as transfer agent. | 8-K | 4.1 | 4/17/03 | ||||||
4.8 | Voting Trust Deed, dated as of April 17, 2003, between Carnival Corporation and The Law Debenture Trust Corporation (Cayman) Limited, as trustee. | 8-K | 4.2 | 4/17/03 | ||||||
4.9 | SVE Special Voting Deed, dated as of April 17, 2003, between Carnival Corporation, DLS SVC Limited, P&O Princess Cruises plc, The Law Debenture Trust Corporation (Cayman) Limited, as trustee, and The Law Debenture Trust Corporation, P.L.C. | 8-K | 4.3 | 4/17/03 | ||||||
4.10 | Form of Amended and Restated Deposit Agreement and holders from time to time of receipts issued thereunder. | Post Amend- ment to Form F-6 | 99-a | 4/15/03 | ||||||
4.11 | Indenture, dated as of April 25, 2001, between Carnival Corporation and U.S. Bank Trust National Association, as trustee, relating to unsecured and unsubordinated debt securities. | S-3 | 4.5 | 6/13/01 | ||||||
4.12 | Form of Indenture, dated March 1, 1993, between Carnival Cruise Lines, Inc. and First Trust National Association, as Trustee, relating to the Debt Securities, including form of Debt Security. | S-3 | 4 | 3/2/93 | ||||||
4.13 | Second Supplemental Indenture, dated December 1, 2003, between Carnival plc and Carnival Corporation to The Bank of New York, as Trustee, relating to 7.875% debentures due 2027. | 10-K | 4.14 | 11/30/03 | ||||||
Material contracts | ||||||||||
10.1* | Carnival Corporation Nonqualified Retirement Plan for Highly Compensated Employees. | 10-Q | 10.1 | 8/31/07 |
51
INDEX TO EXHIBITS
Incorporated by Reference | ||||||||||
Exhibit | Exhibit Description | Form | Exhibit | Filing | Filed | |||||
10.2* | Amendment to the Amended and Restated Carnival Corporation 1992 Stock Option Plan. | 10-K | 10.2 | 11/30/03 | ||||||
10.3 | Facilities Agreement dated October 21, 2005, between Carnival Corporation, Carnival plc, and certain of Carnival Corporation and Carnival plc subsidiaries, The Royal Bank of Scotland as facilities agent and a syndicate of financial institutions. | 10-K | 10.3 | 11/30/05 | ||||||
10.4* | Amended and Restated Carnival Corporation 1992 Stock Option Plan. | 10-K | 10.4 | 11/30/97 | ||||||
10.5* | Carnival Cruise Lines, Inc. 1993 Restricted Stock Plan adopted on January 15, 1993 and as amended January 5, 1998 and December 21, 1998. | 10-K | 10.5 | 11/30/98 | ||||||
10.6* | Carnival Corporation “Fun Ship” Nonqualified Savings Plan. | 10-K | 10.6 | 11/30/97 | ||||||
10.7* | Amendment to the Carnival Corporation Nonqualified Retirement Plan for Highly Compensated Employees. | 10-Q | 10.1 | 2/28/07 | ||||||
10.8* | Carnival Cruise Lines, Inc. Non-Qualified Retirement Plan. | 10-K | 10.4 | 11/30/90 | ||||||
10.9* | Executive Long-term Compensation Agreement, dated as of January 16, 1998, between Robert H. Dickinson and Carnival Corporation. | 10-K | 10.2 | 11/30/97 | ||||||
10.10* | Consulting Agreement/ Registration Rights Agreement, dated June 14, 1991, between Carnival Corporation and Ted Arison. | S-3A | 4.3 | 7/16/91 | ||||||
10.11* | First Amendment to Consulting Agreement/ Registration Rights Agreement between Carnival Corporation and Ted Arison. | 10-K | 10.40 | 11/30/92 | ||||||
10.12* | Form of Appointment Letter for Non-Executive Directors. | 10-Q | 10.1 | 5/31/08 | ||||||
10.13* | Form of Appointment Letter for Executive Directors. | 10-Q | 10.2 | 5/31/08 | ||||||
10.14* | Amended and Restated Carnival plc 2005 Employee Share Plan. | 10-Q | 10.1 | 2/28/09 |
52
INDEX TO EXHIBITS
Incorporated by Reference | ||||||||||
Exhibit | Exhibit Description | Form | Exhibit | Filing | Filed | |||||
10.15* | Carnival Corporation Supplemental Executive Retirement Plan. | 10-K | 10.32 | 11/30/99 | ||||||
10.16* | Amendment to the Carnival Corporation Supplemental Executive Retirement Plan. | 10-K | 10.31 | 11/30/00 | ||||||
10.17* | Amendment to the Carnival Corporation “Fun Ship” Nonqualified Savings Plan. | 10-K | 10.33 | 11/30/99 | ||||||
10.18* | Amendment to the Carnival Corporation “Fun Ship” Nonqualified Savings Plan. | 10-Q | 10.2 | 2/28/07 | ||||||
10.19* | Amendment to the Carnival Corporation “Fun Ship” Nonqualified Savings Plan. | 10-K | 10.34 | 11/30/00 | ||||||
10.20* | Amendment to the Carnival Corporation “Fun Ship” Nonqualified Savings Plan. | 10-K | 10.37 | 11/30/01 | ||||||
10.21* | Amendment to the Carnival Corporation Supplemental Executive Retirement Plan. | 10-Q | 10.3 | 2/28/07 | ||||||
10.22* | Amended and Restated Carnival Corporation 2001 Outside Director Stock Plan. | 10-Q | 10.1 | 5/31/09 | ||||||
10.23* | Amended and Restated Carnival Corporation 2002 Stock Plan. | 10-Q | 10.3 | 2/28/09 | ||||||
10.24* | Agreement with Pier Luigi Foschi. | 8-K | 10.1 | 9/1/09 | ||||||
10.25 | Succession Agreement, dated as of May 28, 2002, to Registration Rights Agreement, dated June 14, 1991, between Carnival Corporation and Ted Arison. | 10-Q | 10.2 | 5/31/02 | ||||||
10.26* | Carnival Corporation & plc Non-Executive Board of Director Cruise Benefit Policy. | 10-Q | 10.1 | 8/31/05 | ||||||
10.27* | Amendment to the Carnival Corporation Nonqualified Retirement Plan For Highly Compensated Employees. | 10-Q | 10.1 | 2/28/06 | ||||||
10.28* | Amendment of the Carnival Corporation “Fun Ship” Nonqualified Savings Plan. | 10-Q | 10.1 | 2/28/03 | ||||||
10.29* | Amendment of the Carnival Corporation Nonqualified Retirement Plan For Highly Compensated Employees. | 10-Q | 10.2 | 2/28/03 |
53
INDEX TO EXHIBITS
Incorporated by Reference | ||||||||||
Exhibit | Exhibit Description | Form | Exhibit | Filing | Filed | |||||
10.30* | The P&O Princess Cruises Executive Share Option Plan. | 20-F | 4.9 | 12/30/01 | ||||||
10.31* | The P&O Princess Cruises Deferred Bonus and Co-Investment Matching Plan. | 20-F | 4.10 | 12/30/01 | ||||||
10.32* | Carnival Cruise Lines Management Incentive Plan. | 10-Q | 10.1 | 8/31/08 | ||||||
10.33* | Amendment to the Carnival Corporation Supplemental Executive Retirement Plan. | 10-Q | 10.1 | 2/29/04 | ||||||
10.34* | Amendment to the Carnival Corporation Nonqualified Retirement Plan for Highly Compensated Employees. | 10-Q | 10.2 | 2/29/04 | ||||||
10.35* | Amendment to the Carnival Corporation “Fun Ship” Nonqualified Savings Plan. | 10-Q | 10.3 | 2/29/04 | ||||||
10.36* | Amendment to the Carnival Corporation “Fun Ship” Nonqualified Savings Plan. | 10-Q | 10.1 | 2/28/05 | ||||||
10.37* | Form of Nonqualified Stock Option Agreement for the Amended and Restated Carnival Corporation 2001 Outside Director Stock Plan. | 10-Q | 10.5 | 8/31/05 | ||||||
10.38* | Form of Restricted Stock Award Agreement for the Amended and Restated Carnival Corporation 2001 Outside Director Stock Plan. | 10-K | 10.60 | 11/30/07 | ||||||
10.39* | Form of Restricted Stock Unit Award Agreement for the Amended and Restated Carnival Corporation 2001 Outside Director Stock Plan. | 10-K | 10.61 | 11/30/07 | ||||||
10.40* | Form of Share Option Certificate for the Amended and Restated Carnival plc 2005 Employee Share Plan. | 10-Q | 10.8 | 8/31/05 | ||||||
10.41 | Deed of Guarantee, dated October 21, 2005, between Carnival Corporation as guarantor and the Royal Bank of Scotland plc as facilities agent. | 10-K | 10.63 | 11/30/05 | ||||||
10.42 | Deed of Guarantee, dated October 21, 2005, between Carnival plc as guarantor and the Royal Bank of Scotland plc as facilities agent. | 10-K | 10.64 | 11/30/05 |
54
INDEX TO EXHIBITS
Incorporated by Reference | ||||||||||
Exhibit | Exhibit Description | Form | Exhibit | Filing | Filed | |||||
10.43* | Corporate Aviation Administrative Policy Statement for the use of Carnival Corporation & plc aircraft. | 10-Q | 10.2 | 2/28/06 | ||||||
10.44* | Form of Restricted Share Unit Award Certificate for the Amended and Restated Carnival plc 2005 Employee Share Plan. | 10-Q | 10.3 | 2/28/06 | ||||||
10.45* | Form of Restricted Stock Unit Agreement for the Amended and Restated Carnival Corporation 2002 Stock Plan. | 10-K | 10.67 | 11/30/07 | ||||||
10.46* | Princess Cruises Chief Executive Officer Supplemental Retirement Plan – 2008 restatement. | 10-Q | 10.1 | 2/28/09 | ||||||
10.47* | Amendment to the P&O Princess Cruises Executive Share Option Plan. | 10-Q | 10.5 | 2/28/07 | ||||||
10.48* | Amendment to the P&O Princess Cruises Deferred Bonus and Co-Investment Matching Plan. | 10-Q | 10.6 | 2/28/07 | ||||||
10.49* | Form of Executive Restricted Stock Agreement for the Amended and Restated Carnival Corporation 2002 Stock Plan. | 10-Q | 10.4 | 2/28/09 | ||||||
10.50 | Amendment Agreement, dated July 21, 2007, to the Facilities Agreement dated October 21, 2005, by and among Carnival Corporation, Carnival plc, and certain of Carnival Corporation and Carnival plc subsidiaries, The Royal Bank of Scotland, as Facilities Agent, and a syndicate of financial institutions. | 10-Q | 10.2 | 8/31/07 | ||||||
10.51* | Amendment to the Carnival Corporation Supplemental Executive Retirement Plan. | 8-K | 10.1 | 10/19/07 | ||||||
10.52* | Form of Executive Restricted Stock Agreement for Executives with Long-term Compensation Agreements. | 10-Q | 10.5 | 2/28/09 | ||||||
10.53* | Amended and Restated Carnival Corporation & plc Management Incentive Plan for Executive Officers. | 10-K | 10.58 | 11/30/08 | ||||||
10.54* | Amended and Restated Executive Long-term Compensation Agreement, dated January 15, 2008, between Carnival Corporation and Micky Arison. | 10-Q | 10.2 | 2/29/08 |
55
INDEX TO EXHIBITS
Incorporated by Reference | ||||||||||
Exhibit | Exhibit Description | Form | Exhibit | Filing | Filed | |||||
10.55* | Amended and Restated Executive Long-term Compensation Agreement dated January 15, 2008, between Carnival Corporation and Howard S. Frank. | 10-Q | 10.3 | 2/29/08 | ||||||
10.56* | Amendment to the Carnival Corporation Nonqualified Retirement Plan for Highly Compensated Employees. | 10-Q | 10.7 | 2/28/09 | ||||||
10.57* | Amendment to the Carnival Corporation Fun Ship Nonqualified Savings Plan. | 10-Q | 10.8 | 2/28/09 | ||||||
10.58* | Amendment to the Carnival Corporation Supplemental Executive Retirement Plan. | 10-Q | 10.9 | 2/28/09 | ||||||
Statements regarding computations of ratios | ||||||||||
12 | Ratio of Earnings to Fixed Charges | X | ||||||||
Annual report to security holders | ||||||||||
13 | Portions of 2009 Annual Report. | X | ||||||||
Subsidiaries of the registrants | ||||||||||
21 | Significant Subsidiaries of Carnival Corporation and Carnival plc. | X | ||||||||
Consents of experts and counsel | ||||||||||
23 | Consent of Independent Registered Certified Public Accounting Firm. | X | ||||||||
Power of attorney | ||||||||||
24 | Powers of Attorney given by certain Directors of Carnival Corporation and Carnival plc to Micky Arison, Howard S. Frank, David Bernstein and Arnaldo Perez authorizing such persons to sign this 2009 joint Annual Report on Form 10-K and any future amendments on their behalf. | X | ||||||||
Rule 13a-14(a)/15d-14(a) certifications | ||||||||||
31.1 | Certification of Chief Executive Officer of Carnival Corporation pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | X |
56
INDEX TO EXHIBITS
Incorporated by Reference | ||||||||||
Exhibit | Exhibit Description | Form | Exhibit | Filing | Filed | |||||
31.2 | Certification of Chief Operating Officer of Carnival Corporation pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes- Oxley Act of 2002. | X | ||||||||
31.3 | Certification of Senior Vice President and Chief Financial Officer of Carnival Corporation pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | X | ||||||||
31.4 | Certification of Chief Executive Officer of Carnival plc pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | X | ||||||||
31.5 | Certification of Chief Operating Officer of Carnival plc pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | X | ||||||||
31.6 | Certification of Senior Vice President and Chief Financial Officer of Carnival plc pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | X | ||||||||
Section 1350 certifications | ||||||||||
32.1** | Certification of Chief Executive Officer of Carnival Corporation pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | X | ||||||||
32.2** | Certification of Chief Operating Officer of Carnival Corporation pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | X | ||||||||
32.3** | Certification of Senior Vice President and Chief Financial Officer of Carnival Corporation pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | X | ||||||||
32.4** | Certification of Chief Executive Officer of Carnival plc pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | X |
57
INDEX TO EXHIBITS
Incorporated by Reference | ||||||||||
Exhibit | Exhibit Description | �� | Form | Exhibit | Filing | Filed | ||||
32.5** | Certification of Chief Operating Officer of Carnival plc pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | X | ||||||||
32.6** | Certification of Senior Vice President and Chief Financial Officer of Carnival plc pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | X | ||||||||
Interactive data file | ||||||||||
101** | The financial statements from Carnival Corporation & plc’s joint Annual Report on Form 10-K for the year ended November 30, 2009, as filed with the SEC on January 29, 2010 formatted in XBRL, as follows: | |||||||||
(i) the Consolidated Statements of Operations for the years ended November 30, 2009, 2008 and 2007; | ||||||||||
(ii) the Consolidated Balance Sheets at November 30, 2009 and 2008; | ||||||||||
(iii) the Consolidated Statements of Cash Flows for the years ended November 30, 2009, 2008 and 2007; | ||||||||||
(iv) the Consolidated Statements of Shareholders’ Equity for the years ended November 30, 2009, 2008 and 2007; | ||||||||||
and | ||||||||||
(v) the notes to the consolidated financial statements, tagged as blocks of text. | X |
* | Indicates a management contract or compensation plan or arrangement. |
** | These items are furnished and not filed. |
58