UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended February ~~29, 2020~~28, 2021


☐			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: 001-9610 Commission file number: 001-15136

Carnival Corporation

Carnival plc

(Exact name of registrant as
specified in its charter)

Republic of Panama

England and Wales

(State or other jurisdiction of
incorporation or organization)

59-1562976

98-0357772

(I.R.S. Employer Identification No.)

3655 N.W. 87th Avenue

Carnival House, 100 Harbour Parade

Miami,

Florida

33178-2428

Southampton

SO15 1ST

United Kingdom

(Address of principal
executive offices)
(Zip Code)


(305)	599-2600	011	44 23 8065 5000
(Registrant’s telephone number, including area code)		(Registrant’s telephone number, including area code)

None		None
(Former name, former address and former fiscal year, if changed since last report)		(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock ($0.01 par value)	CCL	New York Stock Exchange, Inc.
Ordinary Shares each represented by American Depository 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	CUK	New York Stock Exchange, Inc.
~~1.625% Senior Notes due 2021~~	~~CCL21~~	~~New York Stock Exchange LLC~~
1.875% Senior Notes due 2022	CUK22	New York Stock Exchange LLC
1.000% Senior Notes due 2029	CUK29	New York Stock Exchange LLC

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 ☑ No ☐

Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☑ No ☐

Indicate by check mark whether the registrants are large accelerated filers, accelerated filers, non-accelerated filers, smaller reporting companies, or emerging growth companies. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filers

☑

Accelerated filers

☐

Non-accelerated filers

☐

Smaller reporting companies

☐

Emerging growth companies

☐

If emerging growth companies, indicate by check mark if the registrants have elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑


At March ~~25, 2020,~~31, 2021, Carnival Corporation had outstanding ~~527,817,680~~973,540,516 shares of Common Stock, $0.01 par value.						At March ~~25, 2020,~~31, 2021, Carnival plc had outstanding ~~182,536,832~~184,023,036 Ordinary Shares $1.66 par value, one Special Voting Share, GBP 1.00 par value and ~~527,817,680~~973,540,516 Trust Shares of beneficial interest in the P&O Princess Special Voting Trust.

Table of ~~Contents~~C ontents

CARNIVAL CORPORATION & PLC

TABLE OF CONTENTS

Table of ~~Contents~~C ontents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

CARNIVAL CORPORATION & PLC

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(UNAUDITED)

(in millions, except per share data)


		Three Months Ended February 29/28,							Three Months Ended February 28/29,
		2020		2019			2021		2020
Revenues	Revenues					Revenues
Passenger ticket	Passenger ticket	$	3,234	$	3,199	Passenger ticket	$	3	$	3,234
Onboard and other	Onboard and other	1,556		1,474		Onboard and other	23		1,556
		4,789		4,673			26		4,789
Operating Costs and Expenses	Operating Costs and Expenses					Operating Costs and Expenses
Commissions, transportation and other	Commissions, transportation and other	766		709		Commissions, transportation and other	15		766
Onboard and other	Onboard and other	471		467		Onboard and other	7		471
Payroll and related	Payroll and related	610		557		Payroll and related	218		610
Fuel	Fuel	396		381		Fuel	103		396
Food	Food	277		268		Food	11		277
Ship and other impairments						Ship and other impairments	0		330
Other operating	Other operating	1,001		759		Other operating	181		671
		3,523		3,142			535		3,523
Selling and administrative	Selling and administrative	678		629		Selling and administrative	462		678
Depreciation and amortization	Depreciation and amortization	570		516		Depreciation and amortization	552		570
Goodwill impairment		731		—
Goodwill impairments						Goodwill impairments	0		731
		5,502		4,287			1,549		5,502
Operating Income (Loss)	Operating Income (Loss)	(713)		386		Operating Income (Loss)	(1,524)		(713)
Nonoperating Income (Expense)	Nonoperating Income (Expense)					Nonoperating Income (Expense)
Interest income	Interest income	5		4		Interest income	3		5
Interest expense, net of capitalized interest	Interest expense, net of capitalized interest	(55)		(51)		Interest expense, net of capitalized interest	(398)		(55)

Other income (expense), net	Other income (expense), net	(7)		(2)		Other income (expense), net	(61)		(7)
		(57)		(49)			(455)		(57)
Income (Loss) Before Income Taxes	Income (Loss) Before Income Taxes	(770)		338		Income (Loss) Before Income Taxes	(1,979)		(770)
Income Tax Expense, Net		(11)		(2)
Income Tax Benefit (Expense), Net						Income Tax Benefit (Expense), Net	6		(11)
Net Income (Loss)	Net Income (Loss)	$	(781)	$	336	Net Income (Loss)	$	(1,973)	$	(781)
Earnings Per Share	Earnings Per Share					Earnings Per Share
Basic	Basic	$	(1.14)	$	0.48	Basic	$	(1.80)	$	(1.14)
Diluted	Diluted	$	(1.14)	$	0.48	Diluted	$	(1.80)	$	(1.14)

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

Table of ~~Contents~~C ontents

CARNIVAL CORPORATION & PLC

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

(in millions)


		Three Months Ended February 29/28,							Three Months Ended February 28/29,
		2020		2019			2021		2020
Net Income (Loss)	Net Income (Loss)	$	(781)	$	336	Net Income (Loss)	$	(1,973)	$	(781)
Items Included in Other Comprehensive Income (Loss)	Items Included in Other Comprehensive Income (Loss)					Items Included in Other Comprehensive Income (Loss)
Change in foreign currency translation adjustment	Change in foreign currency translation adjustment	25		79		Change in foreign currency translation adjustment	199		25
Other	Other	13		—		Other	4		13
Other Comprehensive Income (Loss)	Other Comprehensive Income (Loss)	38		79		Other Comprehensive Income (Loss)	203		38
Total Comprehensive Income (Loss)	Total Comprehensive Income (Loss)	$	(743)	$	415	Total Comprehensive Income (Loss)	$	(1,770)	$	(743)

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

Table of ~~Contents~~C ontents

CARNIVAL CORPORATION & PLC

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in millions, except par values)

February 29, 2020 November 30, 2019
ASSETS
Current Assets
Cash and cash equivalents $ 1,354 $ 518
Trade and other receivables, net 405 444
Inventories 440 427
Prepaid expenses and other 687 671
Total current assets 2,885 2,059
Property and Equipment, Net 38,023 38,131
Operating Lease Right-of-Use Assets (a) 1,469 —
Goodwill 2,176 2,912
Other Intangibles 1,173 1,174
Other Assets 1,216 783
$ 46,943 $ 45,058
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Short-term borrowings $ 1,004 $ 231
Current portion of long-term debt 2,196 1,596
Current portion of operating lease liabilities (a) 168 —
Accounts payable 904 756
Accrued liabilities and other 1,754 1,809
Customer deposits 4,690 4,735
Total current liabilities 10,716 9,127
Long-Term Debt 9,738 9,675
Long-Term Operating Lease Liabilities (a)
1,312 —
Other Long-Term Liabilities 887 890
Contingencies
Shareholders’ Equity
Common stock of Carnival Corporation, $0.01 par value; 1,960 shares authorized; 658 shares at 2020 and 657 shares at 2019 issued 7 7
Ordinary shares of Carnival plc, $1.66 par value; 217 shares at 2020 and 2019 issued 359 358
Additional paid-in capital 8,829 8,807
Retained earnings 25,527 26,653
Accumulated other comprehensive income (loss) (“AOCI”) (2,028) (2,066)
Treasury stock, 130 shares at 2020 and 2019 of Carnival Corporation and 60 shares at 2020 and 2019 of Carnival plc, at cost (8,404) (8,394)
Total shareholders’ equity 24,290 25,365
$ 46,943 $ 45,058

~~(a)We adopted the provisions of~~ ~~Leases~~ ~~on December 1, 2019.~~


	February 28, 2021		November 30, 2020
ASSETS
Current Assets
Cash and cash equivalents	$	9,674	$	9,513
Short-term investments	1,840		0
Trade and other receivables, net	250		273
Inventories	312		335
Prepaid expenses and other	382		443
Total current assets	12,459		10,563
Property and Equipment, Net	39,583		38,073
Operating Lease Right-of-Use Assets	1,354		1,370
Goodwill	814		807
Other Intangibles	1,195		1,186
Other Assets	1,821		1,594
	$	57,226	$	53,593
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Short-term borrowings	$	3,083	$	3,084
Current portion of long-term debt	1,726		1,742
Current portion of operating lease liabilities	142		151
Accounts payable	505		624
Accrued liabilities and other	1,336		1,144
Customer deposits	1,826		1,940
Total current liabilities	8,619		8,686
Long-Term Debt	26,522		22,130
Long-Term Operating Lease Liabilities	1,256		1,273
Other Long-Term Liabilities	1,017		949
Contingencies and Commitments	0		0
Shareholders’ Equity
Common stock of Carnival Corporation, $0.01 par value; 1,960 shares authorized; 1,104 shares at 2021 and 1,060 shares at 2020 issued	11		11
Ordinary shares of Carnival plc, $1.66 par value; 217 shares at 2021 and 2020 issued	361		361
Additional paid-in capital	14,977		13,948
Retained earnings	14,102		16,075
Accumulated other comprehensive income (loss) (“AOCI”)	(1,233)		(1,436)
Treasury stock, 130 shares at 2021 and 2020 of Carnival Corporation and 59 shares at 2021 and 60 shares at 2020 of Carnival plc, at cost	(8,404)		(8,404)
Total shareholders’ equity	19,813		20,555
	$	57,226	$	53,593

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

Table of ~~Contents~~C ontents

CARNIVAL CORPORATION & PLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in millions)


		Three Months Ended February 29/28,							Three Months Ended February 28/29,
		2020		2019			2021		2020
OPERATING ACTIVITIES	OPERATING ACTIVITIES					OPERATING ACTIVITIES
Net income (loss)	Net income (loss)	$	(781)	$	336	Net income (loss)	$	(1,973)	$	(781)
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities						Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Depreciation and amortization	Depreciation and amortization	570		516		Depreciation and amortization	552		570
Impairments	Impairments	1,062		—		Impairments	17		1,062

Share-based compensation	Share-based compensation	20		20		Share-based compensation	40		20
Other, net		(73)		12
Amortization of discounts and debt issue costs						Amortization of discounts and debt issue costs	42		6
Noncash lease expense						Noncash lease expense	36		42
(Gain) loss on ship sales and other, net						(Gain) loss on ship sales and other, net	50		(121)
		798		884			(1,236)		798
Changes in operating assets and liabilities	Changes in operating assets and liabilities					Changes in operating assets and liabilities
Receivables	Receivables	21		(50)		Receivables	6		21
Inventories	Inventories	(15)		7		Inventories	(1)		(15)
Prepaid expenses and other	Prepaid expenses and other	(120)		(154)		Prepaid expenses and other	(263)		(120)
Accounts payable	Accounts payable	148		65		Accounts payable	(128)		148
Accrued liabilities and other	Accrued liabilities and other	120		5		Accrued liabilities and other	167		120
Customer deposits	Customer deposits	(36)		358		Customer deposits	(49)		(36)
Net cash provided by operating activities		916		1,116
Net cash provided by (used in) operating activities						Net cash provided by (used in) operating activities	(1,503)		916
INVESTING ACTIVITIES	INVESTING ACTIVITIES					INVESTING ACTIVITIES
Purchases of property and equipment	Purchases of property and equipment	(1,326)		(2,129)		Purchases of property and equipment	(1,774)		(1,326)
Proceeds from sales of ships	Proceeds from sales of ships	226		—		Proceeds from sales of ships	9		226
Payments of fuel derivative settlements		—		(6)
Other, net		(61)		76
Purchase of minority interest						Purchase of minority interest	0		(81)
Purchase of short-term investments						Purchase of short-term investments	(1,840)		0
Derivative settlements and other, net						Derivative settlements and other, net	17		20
Net cash provided by (used in) investing activities	Net cash provided by (used in) investing activities	(1,161)		(2,059)		Net cash provided by (used in) investing activities	(3,589)		(1,161)
FINANCING ACTIVITIES	FINANCING ACTIVITIES					FINANCING ACTIVITIES
Proceeds from (repayments of) short-term borrowings, net	Proceeds from (repayments of) short-term borrowings, net	779		(81)		Proceeds from (repayments of) short-term borrowings, net	0		779
Principal repayments of long-term debt	Principal repayments of long-term debt	(132)		(95)		Principal repayments of long-term debt	(668)		(132)
Proceeds from issuance of long-term debt	Proceeds from issuance of long-term debt	823		1,439		Proceeds from issuance of long-term debt	4,980		823
Dividends paid	Dividends paid	(344)		(348)		Dividends paid	0		(344)
Purchases of treasury stock	Purchases of treasury stock	(12)		(274)		Purchases of treasury stock	0		(12)

Other, net		(24)		(29)
Issuance of common stock, net						Issuance of common stock, net	997		2
Debt issue costs and other, net						Debt issue costs and other, net	(93)		(26)
Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	1,089		612		Net cash provided by (used in) financing activities	5,216		1,089
Effect of exchange rate changes on cash, cash equivalents and restricted cash	Effect of exchange rate changes on cash, cash equivalents and restricted cash	(7)		1		Effect of exchange rate changes on cash, cash equivalents and restricted cash	14		(7)
Net increase (decrease) in cash, cash equivalents and restricted cash	Net increase (decrease) in cash, cash equivalents and restricted cash	838		(331)		Net increase (decrease) in cash, cash equivalents and restricted cash	138		838
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	530		996		Cash, cash equivalents and restricted cash at beginning of period	9,692		530
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	1,368	$	665	Cash, cash equivalents and restricted cash at end of period	$	9,829	$	1,368

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

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CARNIVAL CORPORATION & PLC

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(UNAUDITED)

(in millions)

Common
stock Ordinary
shares Additional
paid-in
capital Retained
earnings AOCI Treasury
stock Total shareholders’ equity
At November 30, 2018 $ 7 $ 358 $ 8,756 $ 25,066 $ (1,949) $ (7,795) $ 24,443
Changes in accounting principles (a) — — — (24) — — (24)
Net income (loss) — — — 336 — — 336
Other comprehensive income (loss) — — — — 79 — 79
Cash dividends declared ($0.50 per share) — — — (345) — — (345)
Purchases of treasury stock under the Repurchase Program and other — — 20 — — (268) (248)
At February 28, 2019 $ 7 $ 358 $ 8,776 $ 25,033 $ (1,869) $ (8,063) $ 24,241
At November 30, 2019 $ 7 $ 358 $ 8,807 $ 26,653 $ (2,066) $ (8,394) $ 25,365
Net income (loss) — — — (781) — — (781)
Other comprehensive income (loss) — — — — 38 — 38
Cash dividends declared ($0.50 per share) — — — (344) — — (344)
Purchases of treasury stock under the Repurchase Program and other — — 22 — — (10) 12
At February 29, 2020 $ 7 $ 359 $ 8,829 $ 25,527 $ (2,028) $ (8,404) $ 24,290

~~(a)We adopted the provisions of~~ ~~Revenue from Contracts with Customers~~ ~~and~~ ~~Derivatives and Hedging~~ ~~on December 1, 2018.~~


	Common stock		Ordinary shares		Additional paid-in capital		Retained earnings		AOCI		Treasury stock		Total shareholders’ equity
At November 30, 2019	$	7	$	358	$	8,807	$	26,653	$	(2,066)	$	(8,394)	$	25,365
Net income (loss)	—		—		—		(781)		—		—		(781)
Other comprehensive income (loss)	—		—		—		—		38		—		38
Cash dividends declared ($0.50 per share)	—		—		—		(344)		—		—		(344)
Purchases of treasury stock under the Repurchase Program and other	—		—		22		—		—		(10)		12
At February 29, 2020	$	7	$	359	$	8,829	$	25,527	$	(2,028)	$	(8,404)	$	24,290

At November 30, 2020	$	11	$	361	$	13,948	$	16,075	$	(1,436)	$	(8,404)	$	20,555
Net income (loss)	—		—		—		(1,973)		—		—		(1,973)
Other comprehensive income (loss)	—		—		—		—		203		—		203
Issuance of common stock, net	—		—		996		—		—		—		997
Other	—		—		32		—		—		—		32
At February 28, 2021	$	11	$	361	$	14,977	$	14,102	$	(1,233)	$	(8,404)	$	19,813

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

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CARNIVAL CORPORATION & PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 – General

The consolidated financial statements include the accounts of Carnival Corporation and Carnival plc and their respective subsidiaries. Together with their consolidated subsidiaries, they are referred to collectively in these consolidated financial statements and elsewhere in this joint Quarterly Report on Form 10-Q as “Carnival Corporation & plc,” “our,” “us” and “we.”

Liquidity and Management’s Plans

~~Due to~~In the ~~spread~~face of the global impact of COVID-19, ~~and~~we paused our guest cruise operations in mid-March 2020. In September 2020 we began the ~~effects~~resumption of ~~growing port restrictions around the world, we previously announced a voluntary pause~~limited guest cruise operations as part of our ~~global fleet cruise operations.~~phased-in return to service. As of February 28, 2021, none of our ships were operating with guests onboard. Significant events affecting travel, including COVID-19 ~~typically~~and our pause in guest cruise operations, have had and continue to have an impact on booking ~~patterns, with the~~patterns. The full extent of the impact ~~generally~~will be determined by our gradual return to service and the length of time ~~the event~~COVID-19 influences travel decisions. We believe that the ongoing effects of COVID-19 on our operations and global bookings have had, and will continue to have, a material negative impact on our financial results and liquidity.

The estimation of our future liquidity requirements includes numerous assumptions that are subject to various risks and ~~such negative impact may~~uncertainties. The principal assumptions used to estimate our future liquidity requirements consist of:

•Expected continued gradual resumption of guest cruise operations

•Expected lower than comparable historical occupancy levels during the resumption of guest cruise operations

•Expected incremental spend for the resumption of guest cruise operations, for bringing our ships out of pause status, returning crew members to our ships and implementing the enhanced health and safety protocols

In addition, we make certain assumptions about new ship deliveries, improvements and disposals, and consider the future export credit financings that are associated with the ship deliveries.

We are complying with the current various heightened governmental regulations required to return to guest cruise operations. We are working with a number of world-leading public health, epidemiological and policy experts to support our ongoing efforts with enhanced health and safety protocols for the return of cruise vacations. These advisors will continue ~~well beyond~~to provide guidance based on the ~~containment~~latest scientific evidence and best practices for protection and mitigation. We also believe that there have been positive developments around the availability and widespread distribution of ~~such outbreak.~~effective COVID-19 vaccines, which we believe will be important to achieving historical occupancy levels over time.

We cannot ~~assure you~~make assurances that our assumptions used to estimate our liquidity requirements ~~will be correct~~may not change because we have never previously experienced a complete cessation of our ~~cruising~~guest cruise operations, and as a consequence, our ability to be predictive is uncertain. In addition, the magnitude ~~duration~~ and ~~speed~~duration of the global pandemic isare uncertain. ~~As a consequence, we cannot estimate~~We have made reasonable estimates and judgments of the impact onof COVID-19 within our ~~business,~~consolidated financial ~~condition or near- or longer-term financial or operational results with reasonable certainty, but we~~statements and there may be changes to those estimates in future periods. We continue to expect a net loss on both a U.S. GAAP and adjusted basis for the ~~fiscal~~second quarter of 2021 and the full year ending November 30, ~~2020. On March 13, 2020, we fully drew down our $3.0 billion multi-currency revolving credit facility (the “Existing Multicurrency Facility”).~~2021. We ~~are taking further~~have taken and continue to take actions to improve our liquidity, including completing various capital market transactions, capital expenditure and operating expense reductions, ~~suspending dividend payments on,~~accelerating the removal of certain ships from our fleet and ~~the repurchase of, the common stock of Carnival Corporation~~we will be pursuing refinancing opportunities to reduce interest expense and ~~the ordinary shares of Carnival plc and pursuing additional financing.~~ extend maturities.

Based on these actions and assumptions regarding the impact of COVID-19, and considering our $11.5 billion of cash and short-term investments at February 28, 2021, we have concluded that we ~~will be able to generate~~have sufficient liquidity to satisfy our obligations ~~and remain in compliance with our existing debt covenants~~ for at least the next twelve ~~months prior to giving effect to any additional financing that may occur.~~

At February 29, 2020, we were in compliance with all of our debt covenants. After considering the effect of COVID-19 on our consolidated EBITDA, the actions we have taken and the other options available to us, we expect to remain in compliance with our current minimum debt service coverage ratio in certain of our debt instruments that requires a minimum of 3:1 ratio of EBITDA to Consolidated Net Interest Charges. If we expected to be out of compliance, we would seek waivers from the lenders prior to any covenant violation. Any covenant waiver may lead to increased costs, increased interest rates, additional restrictive covenants and other available lender protections that would be applicable. There can be no assurance that we would be able to obtain waivers in a timely manner, or on acceptable terms at all. If we were not able to obtain waivers or repay the debt facilities, this would lead to an event of default and potential acceleration of amounts due under all of our outstanding debt and derivative contract payables. As a result, the failure to obtain waivers would have a material adverse effect on us.

On April 1, 2020, we announced the pricing of the private offerings of $4.0 billion first-priority senior secured notes due 2023 (“Secured Notes”) and $1.75 billion senior convertible notes due 2023 ($2.0125 billion if the initial purchasers exercise their option to purchase additional notes) (“Convertible Notes”), and a public offering of $500 million of common stock ($575 million if the underwriters exercise their option to purchase additional shares in full) of Carnival Corporation (“Public Equity Offering”), collectively referred to within this document as the “April 1 financing transactions”. The closings of these offerings are subject to customary conditions and are expected to occur in early April. The net proceeds from the offering of Secured Notes will be deposited in to a segregated escrow account, pending the releases in accordance with certain collateral perfection thresholds.months.

Basis of Presentation

The Consolidated Statements of Income (Loss), the Consolidated Statements of Comprehensive Income (Loss), the Consolidated Statements of Cash Flows and the Consolidated Statements of Shareholders’ Equity for the three months ended February ~~29/28,~~28/29, 2021 and 2020, ~~and 2019,~~ and the Consolidated Balance Sheet at February ~~29, 2020~~28, 2021 are unaudited and, in the opinion of our management, contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement. Our interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes included in the Carnival Corporation & plc ~~2019~~2020 joint Annual Report on Form 10-K (“Form 10-K”) filed with the U.S. Securities and Exchange Commission on January ~~28, 2020. Our operations are seasonal and results for interim periods are not necessarily indicative of the results for the entire year.~~26, 2021.

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~~For~~

COVID-19 and the ~~three months ended February 28, 2019, we reclassified $29 million from tour~~Use of Estimates and ~~other revenues to onboard~~Risks and ~~other revenues as well as $29 million from tour and other costs and expenses to other operating cost and expenses in order to conform to the current year presentation.~~

~~Accounting Pronouncements~~Uncertainty

~~On December 1, 2019, we adopted the FASB issued guidance,~~ ~~Leases, using the modified retrospective approach, which allows entities to either apply the new lease standard to the beginning~~The preparation of ~~the earliest period presented or only to the~~our interim consolidated financial statements in conformity with accounting principles generally accepted in the ~~period~~United States of ~~adoption without restating prior periods.~~America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported and disclosed. The full extent to which the effects of COVID-19 will directly or indirectly impact our business, operations, results of operations and financial condition, including our valuation of goodwill and trademarks, impairment of ships, collectability of trade and notes receivables as well as provisions for pending litigation, will depend on future developments that are highly uncertain. We have ~~elected~~made reasonable estimates and judgments of the impact of COVID-19 within our financial statements and there may be changes to ~~apply the new guidance at the date of adoption without restating prior~~those estimates in future periods.

We have implemented changes to our internal controls to address the collection, recording, and accounting for leases in accordance with the new guidance. Upon adoption of the new guidance, the most significant impact was the recognition of $1.4 billion of right-of-use assets and lease liabilities relating to operating leases, reported within operating lease right-of-use assets and long-term operating lease liabilities, with the current portion of the liability reported within current portion of operating lease liabilities, in our Consolidated Balance Sheet as of December 1, 2019. There was no cumulative effect of applying the new standard and accordingly there was no adjustment to our retained earnings upon adoption. This guidance had an immaterial impact on our Consolidated Statements of Income (Loss), Consolidated Statements of Comprehensive Income (Loss), Consolidated Statements of Cash Flows and the compliance with debt-covenants under our current agreements.Accounting Pronouncements

The FASB issued ~~amended~~ guidance, ~~Intangibles~~Debt - ~~Goodwill~~Debt with Conversion and Other Options and Derivative and Hedging - ~~Internal-Use Software~~Contracts in Entity's Own Equity,which simplifies the accounting for convertible instruments. This guidance eliminates certain models that require separate accounting for embedded conversion features, in certain cases. Additionally, among other changes, the guidance eliminates certain of the conditions for equity classification for contracts in an entity’s own equity. The guidance also requires ~~a customer in a cloud computing arrangement that is a service contract~~entities to ~~follow~~use the ~~internal-use software guidance to determine which implementation costs to capitalize as assets or expense as incurred. The expense related to deferred implementation costs is required to be presented~~if-converted method for all convertible instruments in the ~~same net income (loss) line item as~~diluted earnings per share calculation and include the ~~related hosting fees. Additionally, the payments~~effect of share settlement for ~~deferred implementation costs are required to~~instruments that may be ~~presented~~settled in ~~the same line item in the Consolidated Statements of Cash Flows as payments~~cash or shares, except for ~~the related hosting fees.~~certain liability-classified share-based payment awards. This guidance is required to be adopted by us in the first quarter of ~~2021~~2023 and must be applied using either a ~~prospective~~modified or afull retrospective approach. ~~Early adoption is permitted.~~ We are currently evaluating the impact this guidance will have on our consolidated financial statements.

~~The FASB issued amended guidance,~~ ~~Financial Instruments - Credit Losses~~, which requires an entity to present the net amount expected to be collected for certain financial assets, including trade receivables. On initial recognition and at each reporting period, this guidance will require an entity to recognize an allowance that reflects the entity's current estimate of credit losses expected to be incurred over the life of the financial instrument. This guidance is required to be adopted by us in the first quarter of 2021 and will be applied prospectively with a cumulative-effect adjustment to retained earnings. Early adoption is permitted. We are currently evaluating the impact this guidance will have on our consolidated financial statements.

NOTE 2 – Revenue and Expense Recognition

Guest cruise deposits ~~represent unearned revenues and~~ are initially included in customer deposit liabilities when received. Customer deposits are subsequently recognized as cruise revenues, together with revenues from onboard and other activities, and all associated direct costs and expenses of a voyage are recognized as cruise costs and expenses, upon completion of voyages with durations of ten nights or less and on a pro rata basis for voyages in excess of ten nights. The impact of recognizing these shorter duration cruise revenues and costs and expenses on a completed voyage basis versus on a pro rata basis is not ~~significant.~~material. Certain of our product offerings are bundled and we allocate the value of the bundled services and goods between passenger ticket revenues ~~onboard~~ and ~~other revenues and tour~~onboard and other revenues based upon the estimated standalone selling prices of those goods and services.

~~Future travel discount vouchers are included as a reduction of cruise passenger ticket revenues when such vouchers are utilized.~~ Guest cancellation fees, when applicable, are recognized in ~~cruise~~ passenger ticket revenues at the time of cancellation.

Our ~~sale~~sales to guests of air and other transportation to and from airports near the home ports of our ships are included in passenger ticket revenues, and the related ~~cost~~costs of purchasing these services are included in transportation costs. The proceeds that we collect from the sales of third-party shore excursions are included in onboard and other revenues and the related costs are included in onboard and other costs. The amounts collected on behalf of our onboard concessionaires, net of the amounts remitted to them, are included in onboard and other revenues as concession revenues. All of these amounts are recognized on a completed voyage or pro rata basis as discussed above.

Passenger ticket revenues include fees, taxes and charges collected by us from our guests. A portion of these fees, taxes and charges vary with guest head counts and are directly imposed on a revenue-producing arrangement. This portion of the fees,

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taxes and charges is expensed in commissions, transportation and other costs when the corresponding revenues are recognized. For the three months ended February ~~29/28,~~28/29, fees, taxes, and charges included in commissions, transportation and other costs were not significant in 2021 and $174 million in ~~2020 and $163 million and in 2019.~~2020. The remaining portion of fees, taxes and charges are expensed in other operating expenses when the corresponding revenues are recognized.

Revenues and expenses from our hotel and transportation operations, which are included in our Tour and Other segment, are recognized at the time the services are performed. Revenues from the long-term leasing of ships, which are also included in our Tour and Other segment, are recognized ratably over the term of the agreement.

Customer Deposits

Our payment terms generally require an initial deposit to confirm a reservation, with the balance due prior to the voyage. Cash received from guests in advance of the cruise is recorded in customer deposits and in other long-term liabilities on our Consolidated Balance Sheets. These amounts include refundable deposits. We ~~had~~are providing flexibility to guests with bookings

on sailings cancelled due to the pause in cruise operations by allowing guests to receive enhanced future cruise credits (“FCC”)

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or elect to receive refunds in cash. We have paid and expect to continue to pay cash refunds of customer deposits with respect to a portion of ~~$4.9 billion~~these cancelled cruises. The amount of cash refunds to be paid may depend on the level of guest acceptance of FCCs and future cruise cancellations. We record a liability for FCCs to the extent we have received cash from guests with bookings on cancelled sailings. Total customer deposits as of February ~~29, 2020~~28, 2021 and November 30, ~~2019.~~2020 were $2.2 billion, the majority of which are FCCs. As of February 28, 2021, the current portion of customer deposits was $1.8 billion. This amount includes deposits related to cancelled cruises prior to the election of a cash refund by guests. Refunds payable to guests who have elected cash refunds are recorded in accounts payable. Due to the uncertainty associated with the duration and extent of COVID-19, we are unable to estimate the amount of the February 28, 2021 customer deposits that will be recognized in earnings compared to amounts that will be refunded to customers or issued as a credit for future travel. During the three months ended February 28/29, ~~2020~~2021 and ~~2019,~~2020, we recognized revenues of an immaterial amount and $3.0 billion, respectively, related to our customer deposits as of November 30, ~~2019~~2020 and ~~December 1, 2018. Our~~2019. Historically, our customer deposits balance changes due to the seasonal nature of cash collections, the recognition of revenue, refund of customer deposits and foreign currency translation.

Contract Receivables

Although we generally require full payment from our customers prior to or concurrently with their cruise, we grant credit terms to a relatively small portion of our revenue source. We also have receivables from credit card merchants for cruise ticket purchases and onboard revenue. These receivables are included within trade and other receivables, net.

Contract Assets

Contract assets are amounts paid prior to the start of a voyage, which we record as an asset within prepaid expenses and other and which are subsequently recognized as commissions, transportation and other at the time of revenue ~~recognition.~~recognition or at the time of voyage cancellation. We have contract assets of ~~$134 million and $154 million~~an immaterial amount as of February ~~29, 2020~~28, 2021 and ~~December 1, 2019.~~November 30, 2020.

NOTE 3 – ~~Unsecured~~ Debt

At February 29, 2020, our short-term borrowings consisted of euro-denominated commercial paper of $1.0 billion. For the three months ended February 29/28, 2020 and 2019, there were 0 borrowings or repayments of commercial paper with original maturities greater than three months.Export Credit Facility Borrowings

In December ~~2019,~~2020, we borrowed ~~$823 million~~$1.5 billion under an export credit ~~facility~~facilities due in semi-annual installments through ~~fiscal year 2032.~~2033.

2027 Senior Unsecured Notes

In February ~~2020,~~2021, we ~~extended~~issued an aggregate principal amount of $3.5 billion senior unsecured notes that mature on March 1, 2027 (the “2027 Senior Unsecured Notes”). The 2027 Senior Unsecured Notes bear interest at a ~~$452 million sterling-denominated floating~~ rate ~~bank loan, originally maturing~~of 5.8% per year. The 2027 Senior Unsecured Notes are guaranteed by Carnival plc and the same subsidiaries of Carnival Corporation & plc that guarantee the 2023 Secured Notes, 2026 Secured Notes, 2027 Senior Secured Notes and 2026 Senior Unsecured Notes, and are unsecured. The indenture governing the 2027 Senior Unsecured Notes contains covenants that are substantially similar to the covenants in ~~2022,~~the indentures governing the 2026 Senior Unsecured Notes and, except for the unsecured nature of the 2027 Senior Unsecured Notes, the indentures governing the 2023 Secured Notes, 2026 Secured Notes and 2027 Secured Notes and the credit agreement governing the 2025 Secured Term Loan. These covenants are subject to ~~2025 with an option to extend to 2026.~~a number of important limitations and exceptions.

Covenant Compliance

Our export credit facilities contain one or more covenants that require us to:

~~Refer~~•Maintain minimum interest coverage (EBITDA to ~~Note 11 - "Subsequent Events"~~consolidated net interest charges for ~~a discussion~~the most recently ended four fiscal quarters) (the “Interest Coverage Covenant”) of ~~events that occurred subsequent~~not less than 3.0 to ~~February 29, 2020~~1.0 at the end of each fiscal quarter

•.Maintain minimum shareholders’ equity of $5.0 billion

•Limit our debt to capital percentage (the “Debt to Capital Covenant”) to 65% at the end of each fiscal quarter

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

As of February 28, 2021, we entered into supplemental agreements to waive compliance with the Interest Coverage Covenant and the Debt to Capital Covenant under our export credit facilities through August 31, 2022 or November 30, 2022, as applicable. We will be required to comply beginning with the next testing date of November 30, 2022 or February 28, 2023, as applicable.

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During the first quarter of 2021 we entered into supplemental agreements with respect to our $3.1 billion ($1.7 billion, €1.0 billion and £150 million) multi-currency revolving credit facility (the “Revolving Credit Facility”) and many of our bank loans. These agreements now contain one or more covenants that require us to:

•Maintain the Interest Coverage Covenant at the end of each fiscal quarter from February 28, 2023, at a ratio of not less than 2.0 to 1.0 for the February 28, 2023 and May 31, 2023 testing dates, 2.5 to 1.0 for the August 31, 2023 and November 30, 2023 testing dates, and 3.0 to 1.0 for the February 28, 2024 testing date onwards, or through their respective maturity dates.

•Maintain minimum shareholders’ equity of $5.0 billion.

•Maintain the Debt to Capital Covenant at the end of each fiscal quarter before the November 30, 2021 testing date at a percentage not to exceed 65%. From the November 30, 2021 testing date until the May 31, 2023 testing date, the Debt to Capital Covenant is not to exceed 75%, following which it will be tested at levels which decline ratably to 65% from the May 31, 2024 testing date onwards.

•Maintain minimum liquidity of $1.0 billion through November 30, 2022.

•Adhere to certain restrictive covenants through November 30, 2024.

•Restrict the granting of guarantees and security interests for certain of our outstanding debt through November 30, 2024.

At February 28, 2021, we were in compliance with the applicable covenants under our debt agreements.

Generally, if an event of default under any debt agreement occurs, then, pursuant to cross default acceleration clauses, substantially all of our outstanding debt and derivative contract payables could become due, and all debt and derivative contracts could be terminated. Any financial covenant amendment may lead to increased costs, increased interest rates, additional restrictive covenants and other available lenderprotections that would be applicable.

As of February 28, 2021, the scheduled maturities of our debt are as follows:


(in millions)
Year	Principal Payments
2Q 2021	$	352
3Q 2021 (a)	488
4Q 2021	327
2022	2,851
2023	6,393
2024 (b)	4,548
2025	3,974
Thereafter	13,133
Total	$	32,065

(a)Includes $231 million of principal that was prepaid in March 2021.

(b)Includes the $3.1 billion Revolving Credit Facility. The Revolving Credit Facility was fully drawn in 2020 for six month terms. The maturities for these borrowings are currently extended through September 2021. We may re-borrow such amounts through August 2024 subject to satisfaction of the conditions in the facility. The Revolving Credit Facility also includes an emissions linked margin adjustment whereby, after the initial applicable margin is set per the margin pricing grid, the margin may be adjusted based on performance in achieving certain agreed annual carbon emissions goals. We are required to pay a commitment fee on any undrawn portion.

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NOTE 4 – Contingencies and Commitments

Litigation

~~Litigation~~

OnWe are routinely involved in legal proceedings, claims, disputes, regulatory matters and governmental inspections or investigations arising in the ordinary course of or incidental to our business, including those noted below. Additionally, as a result of the impact of COVID-19, litigation claims, enforcement actions, regulatory actions and investigations, including, but not limited to, those arising from personal injury and loss of life, have been and may, in the future, be asserted against us. We expect many of these claims and actions, or any settlement of these claims and actions, to be covered by insurance and historically the maximum amount of our liability, net of any insurance recoverables, has been limited to our self-insurance retention levels.

We record provisions in the consolidated financial statements for pending litigation when we determine that an unfavorable outcome is probable and the amount of the loss can be reasonably estimated.

Legal proceedings and government investigations are subject to inherent uncertainties, and unfavorable rulings or other events could occur. Unfavorable resolutions could involve substantial monetary damages. In addition, in matters for which conduct remedies are sought, unfavorable resolutions could include an injunction or other order prohibiting us from selling one or more products at all or in particular ways, precluding particular business practices or requiring other remedies. An unfavorable outcome might result in a material adverse impact on our business, results of operations, financial position or liquidity.

As previously disclosed, on May 2, 2019, 2 lawsuits were filed against Carnival Corporation in the U.S. District Court for the Southern District of Florida under Title III of the Cuban Liberty and Democratic Solidarity Act, also known as the Helms-Burton ~~Act. The complaint filed by Havana Docks Corporation alleges it holds an interest~~Act, alleging that Carnival “trafficked” in confiscated Cuban property when certain ships docked at certain ports in Cuba, and that this alleged “trafficking” entitles the plaintiffs to treble damages. On January 21, 2021, the court continued the trial date in the Havana Cruise Port Terminal and the complaint filed by Javier Garcia-Bengochea alleges that he holds an interest in the Port of Santiago, Cuba, both of which were expropriated by the Cuban Government. The complaints further allege that Carnival Cruise Line “trafficked” in those properties by embarking and disembarking passengers at these facilities. The plaintiffs seek all available statutory remedies, including the value of the expropriated property, plus interest, treble damages, attorneys’ fees and costs. The court denied our motionDocks matter to ~~dismiss the complaint filed by Javier Garcia-Bengochea, on August 26, 2019. While on August 28, 2019, the court denied our motion~~October 25, 2021. We continue to dismiss the complaint filed by Havana Docks Corporation, later on January 6, 2020, it dismissed virtually identical cases brought by Havana Docks Corporation against other cruise lines, on the grounds raised in our motion to dismiss. In doing so, the court explicitly reversed its position on the issue and acknowledged the conflict with our case. Therefore, on January 6, 2020, we asked the court to formally dismiss the Havana Docks Corporation complaint.

We believe we have a meritorious ~~defenses~~defense to ~~the claims~~these actions and we ~~intend to vigorously defend against them. We do not~~ believe that ~~it is likely that the outcome~~any liability which may arise as a result of these matters will be material, but litigation is inherently unpredictable and there can be no assurances that the final outcome of the case might not be material to our operating results or financial condition.

Additionally, in the normal course of our business, various claims and lawsuits have been filed or are pending against us. Most of these claims and lawsuits, or any settlement of claims and lawsuits, are covered by insurance and the maximum amount of our liability, net of any insurance recoverables, is typically limited to our self-insurance retention levels. We believe the ultimate outcome of these claims, lawsuits and settlements, as applicable, each and in the aggregate,actions will not have a material impact on our consolidated financial statements.

Contingent Obligations – Indemnifications

Some of the debt contracts we enter into include indemnification provisions obligating us to make payments to the counterparty if certain events occur. These contingencies generally relate to changes in taxes or changes in laws which increase ~~our~~the lender’s costs. There are no stated or notional amounts included in the indemnification clauses, and we are not able to estimate the maximum potential amount of future payments, if any, under these indemnification clauses.

Other Contingencies

We have agreements with a number of credit card processors that transact customer deposits related to our cruise vacations. Certain of these agreements allow the credit card processors to request under certain circumstances that we provide a reserve fund in cash. Although the agreements vary, these requirements may generally be satisfied either through a withheld percentage of customer payments or providing cash funds directly to the card processor. As of February 28, 2021, we had $629 million in reserve funds relating to our customer deposits to satisfy these requirements which are included within other assets. We expect a portion of new customer deposits to be withheld under these agreements. Additionally, as of February 28, 2021, we placed $172 million of cash collateral in escrow, of which $142 million is included within prepaid expenses and other.

We detected ransomware attacks in August 2020 and December 2020, which resulted in unauthorized access to our information technology systems. We engaged a major cybersecurity firm to investigate these matters and notified law enforcement and applicable regulators of these incidents. For the August 2020 event, the investigation phase is complete, as are the communication and reporting phases. We determined that the unauthorized third-party gained access to certain personal information relating to some guests, employees and crew for some of our operations. For the December 2020 event, the investigation and remediation phases are in process and regulators have been notified. There is currently no indication of any misuse of information potentially accessed or acquired and we continue to work with regulators to bring these matters and other reportable incidents to conclusion. We have incurred legal and other costs in connection with these and other cyber incidents, and while at this time we do not believe that these incidents will have a material adverse effect on our business, operations or financial results, no assurances can be given and we may be subject to future attacks or incidents that could have such a material adverse effect.

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COVID-19 Actions

Private Actions

We have been named in a number of individual actions related to COVID-19. Private parties have brought approximately 70 lawsuits as of April 1, 2021 in several U.S. federal courts as well as in France, Italy and Brazil. These actions include tort claims based on a variety of theories, including negligence and failure to warn. The plaintiffs in these actions allege a variety of injuries: some plaintiffs allege only emotional distress, while others allege injuries arising from testing positive for COVID-19. A smaller number of actions include wrongful death claims. All individual actions seek monetary and punitive damages but do not specify exact amounts.

Additionally, as of April 1, 2021, 10 purported class actions have been brought by former guests from Ruby Princess, Diamond Princess, Grand Princess, Coral Princess, Costa Luminosa or Zaandam in several U.S. federal courts and in the Federal Court of Australia. These actions seek compensation based on a variety of tort claims, including, but not limited to, negligence, gross negligence and failure to warn, physical injuries and severe emotional distress associated with being exposed and/or contracting COVID-19 onboard.

As previously disclosed, on April 8, 2020, numerous former guests from Grand Princess filed a purported class action against Carnival Corporation and Carnival plc and 2 of our subsidiaries, Princess Cruise Lines, Ltd. and Fairline Shipping International Corporation, Ltd. (“Fairline Shipping”). On May 5, 2020, this case was transferred to the U.S. District Court for the Central District of California and on June 2, 2020, the plaintiffs removed Fairline Shipping from the case. On October 20, 2020, the court denied the plaintiffs’ motion for class certification, and the plaintiffs filed a petition for leave to appeal this ruling to the U.S. Court of Appeals for the Ninth Circuit on November 3, 2020. On February 17, 2021, the Ninth Circuit Court of Appeals denied that petition.

As previously disclosed, on July 23, 2020, Susan Karpik, a former guest from Ruby Princess filed a purported class action against Carnival plc and Princess Cruises in the Federal Court of Australia. On March 24, 2021 the plaintiffs filed a second amended complaint.

As previously disclosed, 2 purported class actions were filed on behalf of certain purchasers of Carnival Corporation securities alleging violations of Sections 10(b) and 20(a) of the U.S. Securities and Exchange Act of 1934. Following the filing of a third purported class action on behalf of certain options investors, alleging the same set of factual theories, the 3 actions were consolidated with new lead plaintiffs, the New England Carpenters Pension and Guaranteed Annuity Fund and the Massachusetts Laborers’ Pension and Annuity Fund. A consolidated class action complaint was filed on December 15, 2020 on behalf of all purchasers of Carnival Corporation common stock and/or Carnival plc American Depositary Shares, and sellers of put options and purchasers of call options on those securities, between September 16, 2019 and March 31, 2020. The consolidated complaint alleges that defendants Carnival Corporation, Carnival plc, and Arnold W. Donald violated Sections 10(b) and 20(a) of the U.S. Securities and Exchange Act of 1934 by making misrepresentations and omissions related to Carnival Corporation’s COVID-19 knowledge and response. Plaintiffs seek to recover unspecified damages and equitable relief for the alleged misstatements and omissions. A motion to dismiss was filed on January 18, 2021 and was fully briefed as of March 8, 2021.

We continue to take proper actions to defend against the above claims.

Governmental Inquiries and Investigations

Federal and non-U.S. governmental agencies and officials are investigating or otherwise seeking information, testimony and/or documents, regarding COVID-19 incidents and related matters. We are investigating these matters internally and are cooperating with all requests. The investigations could result in the imposition of civil and criminal penalties in the future.

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Ship Commitments

As of February 28, 2021, we expect the timing of our new ship growth capital commitments to be as follows:


(in millions) Year
Remainder of 2021	$	1,449
2022	4,734
2023	2,328
2024	1,874
2025	1,073
Thereafter	0
	$	11,459

NOTE 5 – Fair Value Measurements, Derivative Instruments and Hedging Activities and Financial Risks

Fair Value Measurements

Fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and is measured using inputs in one of the following three categories:

•Level 1 measurements are based on unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access. Valuation of these items does not entail a significant amount of judgment.

•Level 2 measurements are based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active or market data other than quoted prices that are observable for the assets or liabilities.

•Level 3 measurements are based on unobservable data that are supported by little or no market activity and are significant to the fair value of the assets or liabilities.

Considerable judgment may be required in interpreting market data used to develop the estimates of fair value. Accordingly, certain estimates of fair value presented herein are not necessarily indicative of the amounts that could be realized in a current or future market exchange.

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


		February 29, 2020																		November 30, 2019																									February 28, 2021										November 30, 2020
		Carrying Value		Fair Value														Carrying Value		Fair Value																	Carrying Value				Fair Value												Carrying Value	Fair Value
(in millions)	(in millions)					Level 1			Level 2			Level 3					Level 1					Level 2			Level 3		(in millions)	Carrying Value			Level 1				Level 2				Level 3				Carrying Value				Level 1				Level 2
Assets	Assets																					Assets
Long-term other assets (a)	Long-term other assets (a)	$	177	$	—		$	30		$	145		$	181	$	—		$	31	$	149	Long-term other assets (a)	$	47		$	0				$	25			$	19			$	45			$	0			$	17			$	18
Total	Total	$	177	$	—		$	30		$	145		$	181	$	—		$	31	$	149	Total	$	47		$	0		$	25			$	19			$	45			$	0			$	17			$	18
Liabilities	Liabilities																					Liabilities
Fixed rate debt (b)	Fixed rate debt (b)	$	7,351	$	—		$	7,548		$	—		$	7,438	$	—		$	7,782	$	—	Fixed rate debt (b)	$	19,198		$	0		$	20,313			$	0			$	15,547			$	0			$	16,258			$	0
Floating rate debt (b)	Floating rate debt (b)	5,740		—			5,656			—			4,195		—			4,248		—		Floating rate debt (b)	12,868			0			12,213				0				12,034				0				11,412				0
Total	Total	$	13,091	$	—		$	13,204		$	—		$	11,634	$	—		$	12,030	$	—	Total	$	32,065		$	0		$	32,526			$	0			$	27,581			$	0			$	27,670			$	0

(a)Long-term other assets are comprised of notes ~~receivables, which include loans on ship sales.~~receivable. The fair values of our Level 2 notes ~~receivables~~receivable were based on estimated future cash flows discounted at appropriate market interest rates. The fair values of our Level 3 notes receivable were estimated using risk-adjusted discount rates.

(b)The debt amounts above do not include the impact of interest rate swaps or debt issuance costs. The fair values of our publicly-traded notes were based on their unadjusted quoted market prices in markets that are not sufficiently active to be Level 1 and, accordingly, are considered Level 2. The fair values of our other debt were estimated based on current market interest rates being applied to this debt.

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


		February 29, 2020										November 30, 2019											February 28, 2021				November 30, 2020
(in millions)	(in millions)	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3		(in millions)	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets	Assets													Assets
Cash and cash equivalents	Cash and cash equivalents	$	1,354	$	—	$	—	$	518	$	—	$	—	Cash and cash equivalents	$	9,674	$	—	$	—	$	9,513	$	—	$	—
Restricted cash	Restricted cash	15		—		—		13		—		—		Restricted cash	155		—		—		179		—		—

Derivative financial instruments		—		102		—		—		58		—
Short-term investments (a)														Short-term investments (a)	1,840		—		—		—		—		—

Total	Total	$	1,368	$	102	$	—	$	530	$	58	$	—	Total	$	11,670	$	—	$	—	$	9,692	$	—	$	—
Liabilities	Liabilities													Liabilities
Derivative financial instruments	Derivative financial instruments	$	—	$	17	$	—	$	—	$	25	$	—	Derivative financial instruments	$	—	$	9	$	—	$	—	$	10	$	—
Total	Total	$	—	$	17	$	—	$	—	$	25	$	—	Total	$	—	$	9	$	—	$	—	$	10	$	—

(a)Short term investments consist of marketable securities with original maturities of between three and twelve months.

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

Valuation of Goodwill and Trademarks


	Goodwill
(in millions)	NAA Segment		EA Segment		Total
November 30, 2020	$	579	$	228	$	807
Foreign currency translation adjustment	0		8		7
February 28, 2021	$	579	$	235	$	814


	Trademarks
(in millions)	NAA Segment		EA Segment		Total
November 30, 2020	$	927	$	253	$	1,180
Foreign currency translation adjustment	0		8		8
February 28, 2021	$	927	$	261	$	1,188

The determination of the fair value of our reporting units’ and trademarks includes numerous assumptions that are subject to various risks and uncertainties. The effect of COVID-19, the pause in guest cruise operations and the possibility of further extensions have created some uncertainty in forecasting the operating results and future cash flows used in our impairment analyses. For the three months ended February 29, 2020, we recognized goodwill impairment charges of $731 million. We believe that we have made reasonable estimates and judgments. A change in the principal assumptions, which influences the determination of fair value, may result in a need to recognize an additional impairment charge. The principal assumptions, all of which are considered Level 3 inputs, used in our cash flow analyses for the three months ended February 29, 2020 consisted of:

•The timing of our return to service, changes in market conditions and port or other restrictions

•Forecasted revenues net of our most significant variable costs, which are travel agent commissions, costs of air and other transportation, and certain other costs that are directly associated with onboard and other revenues including credit and debit card fees

•The allocation of new ships and the timing of the transfer or sale of ships amongst brands, as well as the estimated proceeds from ship sales

•Weighted-average cost of capital of market participants, adjusted for the risk attributable to the geographic regions in which these cruise brands operate

Refer to Note 1 - “General, COVID-19 and the Use of Estimates and Risks and Uncertainty” for additional discussion.

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Impairments of Ships

We review our long-lived assets for impairment whenever events or circumstances indicate potential impairment. In 2020, as a result of the effect of COVID-19 on our expected future operating cash flows and our decisions to dispose of certain ships, we determined certain impairment triggers had occurred. Accordingly, we performed ~~discounted~~undiscounted cash flow analyses ~~and~~on certain ships in our fleet throughout 2020. Based on these undiscounted cash flow analyses, we determined that certain ships, specifically those being disposed of, had net carrying values that exceeded their estimated undiscounted future cash flows. We determined the ~~estimated~~ fair values of ~~a North America & Australia (“NAA”) segment reporting unit,~~these ships based on their estimated selling value. We believe that we have made reasonable estimates and ~~a Europe & Asia (“EA”) segment reporting unit, no longer exceeded their carrying values. We recognized goodwill impairment charges of $731 million for these reporting units during~~judgments. A change in the ~~first quarter of 2020.~~

~~The~~principal assumptions, which influences the determination of ~~our reporting units' goodwill and trademark~~ fair ~~values includes numerous assumptions that are subject~~value, may result in a need to ~~various risks and uncertainties.~~perform additional impairment reviews. The principal assumptions, all of which are considered Level 3 inputs, used in our cash flow analyses consisted of:

•~~Changes~~Timing of the respective ship’s return to service, changes in market conditions and port ~~restrictions~~ or ~~strategy, including decision about the allocation of new ships amongst brands and the transfer of ships between brands~~other restrictions

•Forecasted ~~future operating results,~~ship revenues net of our most significant variable costs, which are travel agent commissions, costs of air and other transportation and certain other costs that are directly associated with onboard and other revenues, including ~~net revenue yields~~credit and ~~fuel expenses~~debit card fees

•~~Weighted-average cost~~Timing of ~~capital of market participants, adjusted for~~ the ~~risk attributable to the geographic regions in~~

~~which these cruise brands operate~~

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We believe that we have made reasonable estimates and judgments. A change in the conditions, circumstances or strategy (including decisions about the allocation of new ships amongst brands and the transfersale of ships between brands), which influence determinations of fair value, may result in a need to recognize an additional impairment charge. Refer to Note 11 - "Subsequent Events" for a discussion of events that occurred subsequent to February 29, 2020.and estimated proceeds

Goodwill
(in millions) NAA
Segment EA
Segment Total
At November 30, 2019 $ 1,898 $ 1,014 $ 2,912
Impairment charges (300) (431) (731)
Foreign currency translation adjustment — (5) (5)
At February 29, 2020 $ 1,598 $ 578 $ 2,176

Trademarks
(in millions) NAA
Segment EA
Segment Total
At November 30, 2019 $ 927 $ 240 $ 1,167
Foreign currency translation adjustment — — —
At February 29, 2020 $ 927 $ 240 $ 1,167

~~Impairment of Ships~~

~~We review our long-lived assets for impairment whenever events or circumstances indicate potential impairment. As a result of~~For the ~~effect of COVID-19 on our expected future operating cash flows, we determined certain impairment triggers had occurred. Accordingly, we performed undiscounted cash flow analyses on certain ships as of~~three months ended February 29, 2020. Based on these undiscounted cash flow analyses, we determined that certain ships had net carrying values that exceeded their estimated undiscounted future cash flows. We estimated the February 29, 2020, ~~fair values of these ships based on their discounted cash flows. We then compared these estimated fair values to the net carrying values and, as a result,~~ we recognized $172 million and $158 million of ship impairment charges in the North America & Australia (“NAA”) and Europe & Asia (“EA”) segments, respectively, included in other operating expenses of our Consolidated Statements of Income (Loss) ~~for the first quarter of 2020.~~.

~~The principal assumptions used in our analyses consisted~~Refer to Note 1 - “General, COVID-19 and the Use of ~~changes in strategy (including decisions about the sale of ships, estimated sale proceeds~~Estimates and ~~timing, as well as the transfer of ships between brands), forecasted future operating results, including net revenue yields~~Risks and ~~fuel expenses. All principal assumptions are considered Level 3 inputs.~~Uncertainty” for additional discussion.

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Derivative Instruments and Hedging Activities


(in millions)	(in millions)	Balance Sheet Location	February 29, 2020		November 30, 2019		(in millions)	Balance Sheet Location	February 28, 2021		November 30, 2020
Derivative assets
Derivatives designated as hedging instruments
Cross currency swaps (a)		Prepaid expenses and other	$	39	$	32
		Other assets	49		25
Foreign currency forwards (b)		Prepaid expenses and other	14		—
Total derivative assets			$	102	$	58

Derivative liabilities	Derivative liabilities						Derivative liabilities
Derivatives designated as hedging instruments	Derivatives designated as hedging instruments						Derivatives designated as hedging instruments

Cross currency swaps (a)		Accrued liabilities and other	$	—	$	1
		Other long-term liabilities	—		9
Foreign currency zero cost collars (b)		Accrued liabilities and other	2		1

Interest rate swaps ~~(c)~~(a)	Interest rate swaps ~~(c)~~(a)	Accrued liabilities and other	6		6		Interest rate swaps ~~(c)~~(a)	Accrued liabilities and other	$	5	$	5
		Other long-term liabilities	9		9			Other long-term liabilities	5		5
Total derivative liabilities	Total derivative liabilities		$	17	$	25	Total derivative liabilities		$	9	$	10

(a)At February 29, 2020 and November 30, 2019, we had cross currency swaps totaling $1.9 billion, respectively, that are designated as hedges of our net investment in foreign operations with a euro-denominated functional currency. At February 29, 2020, these cross currency swaps settle through 2031.

~~(b)~~At February 29, 2020, we had foreign currency derivatives consisting of foreign currency zero cost collars and foreign currency forwards that are designated as foreign currency cash flow hedges for a portion of our euro-denominated shipbuilding payments. See “Newbuild Currency Risks” below for additional information regarding these derivatives.

~~(c)~~We have interest rate swaps designated as cash flow hedges whereby we receive floating interest rate payments in exchange for making fixed interest rate payments. These interest rate swap agreements effectively changed ~~$288~~$237 million at February ~~29, 2020~~28, 2021 and ~~$300~~$248 million at November 30, ~~2019~~2020 of EURIBOR-based floating rate euro debt to fixed rate euro debt. At February ~~29, 2020,~~28, 2021, these interest rate swaps settle through 2025.

Our derivative contracts include rights of offset with our counterparties. We have elected to net certain of our derivative assets and liabilities within counterparties.


		February 29, 2020																			February 28, 2021
(in millions)	(in millions)	Gross Amounts		Gross Amounts Offset in the Balance Sheet		Total Net Amounts Presented in the Balance Sheet		Gross Amounts not Offset in the Balance Sheet		Net Amounts		(in millions)	Gross Amounts		Gross Amounts Offset in the Balance Sheet		Total Net Amounts Presented in the Balance Sheet		Gross Amounts not Offset in the Balance Sheet		Net Amounts
Assets	Assets	$	102	$	—	$	102	$	(5)	$	97	Assets	$	0	$	0	$	0	$	0	$	0
Liabilities	Liabilities	$	18	$	—	$	17	$	(5)	$	12	Liabilities	$	9	$	0	$	9	$	0	$	9

		November 30, 2019																			November 30, 2020
(in millions)	(in millions)	Gross Amounts		Gross Amounts Offset in the Balance Sheet		Total Net Amounts Presented in the Balance Sheet		Gross Amounts not Offset in the Balance Sheet		Net Amounts		(in millions)	Gross Amounts		Gross Amounts Offset in the Balance Sheet		Total Net Amounts Presented in the Balance Sheet		Gross Amounts not Offset in the Balance Sheet		Net Amounts
Assets	Assets	$	58	$	—	$	58	$	(4)	$	54	Assets	$	0	$	0	$	0	$	0	$	0
Liabilities	Liabilities	$	25	$	—	$	25	$	(4)	$	21	Liabilities	$	10	$	0	$	10	$	0	$	10

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The effect of our derivatives qualifying and designated as hedging instruments recognized in other comprehensive income (loss) and in net income (loss) was as follows:


		Three Months Ended February 29/28,							Three Months Ended February 28/29,
(in millions)	(in millions)	2020		2019		(in millions)	2021		2020
Gains (losses) recognized in AOCI:	Gains (losses) recognized in AOCI:					Gains (losses) recognized in AOCI:
Cross currency swaps - net investment hedges - included component	Cross currency swaps - net investment hedges - included component	$	(2)	$	2	Cross currency swaps - net investment hedges - included component	$	0	$	(2)
Cross currency swaps - net investment hedges - excluded component	Cross currency swaps - net investment hedges - excluded component	$	42	$	(12)	Cross currency swaps - net investment hedges - excluded component	$	0	$	42
Foreign currency zero cost collars - cash flow hedges	Foreign currency zero cost collars - cash flow hedges	$	(1)	$	—	Foreign currency zero cost collars - cash flow hedges	$	0	$	(1)
Foreign currency forwards - cash flow hedges	Foreign currency forwards - cash flow hedges	$	14	$	—	Foreign currency forwards - cash flow hedges	$	0	$	14
Interest rate swaps - cash flow hedges	Interest rate swaps - cash flow hedges	$	1	$	1	Interest rate swaps - cash flow hedges	$	1	$	1
Gains (losses) reclassified from AOCI - cash flow hedges:	Gains (losses) reclassified from AOCI - cash flow hedges:					Gains (losses) reclassified from AOCI - cash flow hedges:
Interest rate swaps - Interest expense, net of capitalized interest	Interest rate swaps - Interest expense, net of capitalized interest	$	(2)	$	(2)	Interest rate swaps - Interest expense, net of capitalized interest	$	(1)	$	(2)
Foreign currency zero cost collars - Depreciation and amortization						Foreign currency zero cost collars - Depreciation and amortization	$	1	$	0
Gains (losses) recognized on derivative instruments (amount excluded from effectiveness testing – net investment hedges)	Gains (losses) recognized on derivative instruments (amount excluded from effectiveness testing – net investment hedges)					Gains (losses) recognized on derivative instruments (amount excluded from effectiveness testing – net investment hedges)
Cross currency swaps - Interest expense, net of capitalized interest	Cross currency swaps - Interest expense, net of capitalized interest	$	10	$	4	Cross currency swaps - Interest expense, net of capitalized interest	$	0	$	10

The amount of estimated cash flow hedges’ unrealized gains and losses that are expected to be reclassified to earnings in the next twelve months is not ~~significant.~~material.

~~Refer to Note 11 - "Subsequent Events" for a discussion of derivative transactions that occurred subsequent to February 29, 2020~~.

Financial Risks

Fuel Price Risks

We manage our exposure to fuel price risk by managing our consumption of fuel. Substantially all of our exposure to market risk for changes in fuel prices relates to the consumption of fuel on our ships. We manage fuel consumption through ship maintenance practices, modifying our itineraries and implementing innovative technologies. ~~We are also adding new, more fuel efficient ships to our fleet and are strategically disposing of smaller, less fuel efficient ships.~~

Foreign Currency Exchange Rate Risks

Overall Strategy

We manage our exposure to fluctuations in foreign currency exchange rates through our normal operating and financing activities, including netting certain exposures to take advantage of any natural offsets and, when considered appropriate, through the use of derivative and non-derivative financial instruments. Our primary focus is to monitor our exposure to, and manage, the economic foreign currency exchange risks faced by our operations and realized if we exchange one currency for another. We currently only hedge certain of our ship commitments and net investments in foreign operations. The financial impacts of the hedging instruments we do employ generally offset the changes in the underlying exposures being hedged.

Operational Currency Risks

Our operations primarily utilize the U.S. dollar, Australian dollar, euro or sterling as their functional currencies. Our operations also have revenue and expenses denominated in non-functional currencies. Movements in foreign currency exchange rates ~~will~~ affect our financial statements.

Investment Currency Risks

We consider our investments in foreign operations to be denominated in stable currencies and ~~are~~ of a long-term nature. We partially mitigate the currency exposure of our investments in foreign operations by designating a portion of our foreign currency debt and derivatives as hedges of these investments. As of February ~~29, 2020,~~28, 2021, we have designated ~~$852~~$718 million of our sterling-denominated debt as non-derivative hedges of our net investments in foreign ~~operations and for~~operations. For the three months ended February ~~29, 2020,~~28, 2021, we recognized $2$42 million of ~~gains~~losses on these non-derivative net investment hedges in the cumulative translation adjustment section of other comprehensive income (loss). We also have ~~$8.2~~$9.6 billion of euro-denominated debt,

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~~including the effect of cross currency swaps,~~ which provides an economic offset for our operations with euro functional currency.

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Newbuild Currency Risks

Our shipbuilding contracts are typically denominated in euros. Our decision to hedge a non-functional currency ship commitment for our cruise brands is made on a case-by-case basis, considering the amount and duration of the exposure, market volatility, economic trends, our overall expected net cash flows by currency and other offsetting risks. We use foreign currency derivative contracts to manage foreign currency exchange rate risk for some of our ship construction payments. ~~At February 29, 2020, for the following newbuilds, we had foreign currency contracts for a portion of our euro-denominated shipyard payments. These contracts are designated as cash flow hedges.~~

Entered Into Matures In Weighted-Average Floor Rate Weighted- Average Ceiling Rate Weighted-Average Forward Rate
Foreign currency zero cost collars
Enchanted Princess 2019 June 2020 $ 1.04 $ 1.28
Mardi Gras 2019 October 2020 $ 1.05 $ 1.28
Foreign currency forwards
Iona 2020 May 2020 £ 0.85

~~If the spot rate is between the ceiling and floor rates on the date of maturity, then we would not owe or receive any payments under the zero cost collars.~~

At February ~~29, 2020,~~28, 2021, our remaining newbuild currency exchange rate risk primarily relates to euro-denominated newbuild contract payments to non-euro functional currency brands, which represent a total unhedged commitment of ~~$6.4~~$7.0 billion for newbuilds scheduled to be delivered ~~from 2020~~ through 2025.

The cost of shipbuilding orders that we may place in the future that is denominated in a different currency than our cruise brands’ will be affected by foreign currency exchange rate fluctuations. These foreign currency exchange rate fluctuations may affect our decision to order new cruise ships.

Interest Rate Risks

We manage our exposure to fluctuations in interest rates through our debt portfolio management and investment strategies. We evaluate our debt portfolio to determine whether to make periodic adjustments to the mix of fixed and floating rate debt through the use of interest rate swaps and the issuance of new ~~debt, amendment of existing debt or early retirement of existing~~ debt.

Concentrations of Credit Risk

As part of our ongoing control procedures, we monitor concentrations of credit risk associated with financial and other institutions with which we conduct significant business. We seek to ~~minimize~~manage these credit risk exposures, including counterparty nonperformance primarily associated with our cash equivalents, investments, notes receivables, ~~committed~~future financing facilities, contingent obligations, derivative instruments, insurance contracts, long-term ship charters and new ship progress payment guarantees, by:

•Conducting business with well-established financial institutions, insurance companies and export credit agencies

•Diversifying our counterparties

•Having guidelines regarding credit ratings and investment maturities that we follow to help safeguard liquidity and minimize risk

•Generally requiring collateral and/or guarantees to support notes receivable on significant asset sales, long-term ship charters and new ship progress payments to shipyards

At February ~~29, 2020,~~28, 2021, our exposures under derivative instruments were not material. We also monitor the creditworthiness of travel agencies and tour operators in Asia, Australia and Europe, which includes charter-hire agreements in Asia and credit and debit card providers to which we extend credit in the normal course of our business. Concentrations of credit risk associated with trade receivables and other receivables, charter-hire agreements and contingent obligations are not considered to be material, principally due to the large number of unrelated accounts, the nature of these contingent obligations and their short maturities. Normally, we have not required collateral or other security to support normal credit sales. Historically, we have not experienced significant credit losses, including counterparty nonperformance, however, because of the impact COVID-19 is having on economies, we have experienced, and may continue to experience, an increase in credit losses.

Our credit exposure also includes contingent obligations related to cash payments received directly by travel agents and tour operators for cash collected by them on cruise sales in Australia and most of Europe where we are obligated to honor our guests’ cruise payments made by them to

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their travel agents and tour operators regardless of whether we have received these payments. Concentrations of credit risk associated with trade receivables and other receivables, charter-hire agreements and contingent obligations are not considered to be material, principally due to the large number of unrelated accounts, the nature of these contingent obligations and their short maturities. We have not historically experienced significant credit losses on our trade receivables, notes receivables, charter-hire agreements and contingent obligations. Because of the impact the COVID-19 outbreak is having on economies, we could experience an increase in future credit losses. We have not normally required collateral or other security to support normal credit sales.

~~NOTE 6 – Leases~~

Substantially all of our leases for which we are the lessee are operating leases of port facilities and real estate and are included within operating lease right-of-use assets, long-term operating lease liabilities and current portion of operating lease liabilities in our Consolidated Balance Sheet as of February 29, 2020.

~~We have port facilities and real estate lease agreements with lease and non-lease components, and in such cases, we account for the components as a single lease component.~~

We do not recognize lease assets and lease liabilities for any leases with an original term of less than one year. For some of our port facilities and real estate lease agreements, we have the option to extend our current lease term by 1 to 10 years. Generally, we do not include renewal options as a component of our present value calculation as we are not reasonably certain that we will exercise the options.

As most of our leases do not have a readily determinable implicit rate, we estimate the incremental borrowing rate ("IBR") to determine the present value of lease payments. We apply judgment in estimating the IBR including considering the term of the lease, the currency in which the lease is denominated, and the impact of collateral and our credit risk on the rate. For leases that were in place upon adoption, we used the remaining lease term as of December 1, 2019 in determining the IBR. For the initial measurement of the lease liabilities for leases commencing after December 1, 2019, the IBR at the lease commencement date was applied.

We amortize our lease assets on a straight-line basis over the lease term. During the quarter ended February 29, 2020, we recognized $17 million of operating lease costs, including lease amortization and imputed interest, related to all of our leases other than the port facilities, as operating lease expense. Variable and short-term lease costs related to operating leases, other than the port facilities, were not material to our consolidated financial statements.

We have multi-year preferential berthing agreements which are operating leases. During the quarter ended February 29, 2020, we had $30 million of lease asset amortization expense and imputed interest expense and $31 million of variable port costs, which vary based on the number of passengers, recorded within commission, transportation and other in our Consolidated Statements of Income (Loss).

We have multiple agreements, with a total undiscounted minimum commitment of approximately $454 million, that have been executed but the lease term has not commenced as of February 29, 2020. These are substantially all related to our rights to use certain port facilities. The leases are expected to commence between 2020 and 2022.

~~During the quarter ended February 29, 2020, we obtained $107 million of right-of-use assets in exchange for new operating lease liabilities.~~

~~Weighted average of the remaining lease terms and weighted average discount rates are as follows:~~


	~~February 29, 2020~~
~~Weighted average remaining lease term - operating leases (in years)~~	13
~~Weighted average discount rate - operating leases~~	~~3.1~~	%

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~~As of February 29, 2020, maturities of lease liabilities were as follows:~~

(in millions)
Year
Total Operating
Leases
Remainder of 2020 $ 158
2021 188
2022 156
2023 148
2024 142
Thereafter 1,039
Total lease payments 1,832
Less: Present value discount (352)
Present value of lease liabilities $ 1,480

~~Under ASC 840,~~ ~~Leases, future minimum lease payments under non-cancelable operating leases of port facilities and other assets as of November 30, 2019 were as follows:~~

(in millions)
Year
Total Operating
Leases
2020 $ 219
2021 196
2022 161
2023 173
2024 167
Thereafter 1,408
$ 2,324

For time charter arrangements where we are the lessor and for transactions with cruise guests related to the use of cabins, we do not separate lease and non-lease components. As the non-lease components are the predominant components in the agreements, we account for these transactions under the Revenue Recognition guidance.

~~We have sales-type leases of ships for which we are the lessor. As of February 29, 2020, the net investment related to these leases was $127 million.~~

NOTE 76 – Segment Information

Our operating segments are reported on the same basis as the internally reported information that is provided to our chief operating decision maker (“CODM”), who is the President and Chief Executive Officer of Carnival Corporation and Carnival plc. The CODM assesses performance and makes decisions to allocate resources for Carnival Corporation & plc based upon review of the results across all of our segments. Our 4 reportable segments are comprised of (1) NAA cruise operations, (2) EA cruise operations, (3) Cruise Support and (4) Tour and Other.

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The operating segments within each of our NAA and EA reportable segments have been aggregated based on the similarity of their economic and other characteristics, including geographic guest sourcing. Our Cruise Support segment includes our portfolio of leading port destinations and other services, all of which are operated for the benefit of our cruise brands. Our Tour and Other segment represents the hotel and transportation operations of Holland America Princess Alaska Tours and other operations.


	Three Months Ended February 28/29,
(in millions)	Revenues		Operating costs and expenses		Selling and administrative		Depreciation and amortization		Operating income (loss)
2021
NAA	$	10	$	316	$	220	$	334	$	(859)
EA	8		198		108		184		(482)
Cruise Support	0		8		129		28		(164)
Tour and Other	7		13		6		6		(18)
	$	26	$	535	$	462	$	552	$	(1,524)
2020
NAA	$	3,140	$	2,274	$	400	$	364	$	(197)	(a)
EA	1,552		1,317		207		166		(569)		(b)
Cruise Support	44		(87)		65		32		35
Tour and Other	52		19		7		8		18
	$	4,789	$	3,523	$	678	$	570	$	(713)

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Three Months Ended February 29/28,
(in millions) Revenues Operating costs and
expenses Selling
and
administrative Depreciation
and
amortization Operating
income (loss)
2020
NAA $ 3,140 $ 2,274 $ 400 $ 364 $ (197) (a)
EA 1,552 1,317 207 166 (569) (b)
Cruise Support 44 (87) 65 32 35
Tour and Other 52 19 7 8 18
$ 4,789 $ 3,523 $ 678 $ 570 $ (713)
2019
NAA $ 3,077 $ 2,010 $ 353 $ 328 $ 386
EA 1,526 1,075 205 152 93
Cruise Support 42 27 65 28 (78)
Tour and Other 29 29 6 9 (15)
$ 4,673 $ 3,142 $ 629 $ 516 $ 386

(a) Includes $300 million of goodwill impairment charges.

(b) Includes $431 million of goodwill impairment charges.

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

Three Months Ended February 29/28
(in millions) 2020 2019
North America $ 2,647 $ 2,520
Europe 1,367 1,399
Australia and Asia 615 584
Other 161 170
$ 4,789 $ 4,673


(in millions)	Three Months Ended February 29, 2020
North America	$	2,647
Europe	1,367
Australia and Asia	615
Other	161
	$	4,789

As a result of the pause in our guest cruise operations, we have experienced essentially no revenue for the three months ended February 28, 2021 and as a result current year data is not meaningful and is not included in the table.

NOTE 87 – Earnings Per Share


		Three Months Ended February 29/28,							Three Months Ended February 28/29,
(in millions, except per share data)	(in millions, except per share data)	2020		2019		(in millions, except per share data)	2021		2020
Net income (loss) for basic and diluted earnings per share	Net income (loss) for basic and diluted earnings per share	$	(781)	$	336	Net income (loss) for basic and diluted earnings per share	$	(1,973)	$	(781)
Weighted-average shares outstanding	Weighted-average shares outstanding	684		693		Weighted-average shares outstanding	1,095		684
Dilutive effect of equity plans	Dilutive effect of equity plans	—		2		Dilutive effect of equity plans	0		0
Diluted weighted-average shares outstanding	Diluted weighted-average shares outstanding	684		695		Diluted weighted-average shares outstanding	1,095		684
Basic earnings per share	Basic earnings per share	$	(1.14)	$	0.48	Basic earnings per share	$	(1.80)	$	(1.14)
Diluted earnings per share	Diluted earnings per share	$	(1.14)	$	0.48	Diluted earnings per share	$	(1.80)	$	(1.14)
Antidilutive equity awards excluded from diluted earnings per share computations		1		—

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Antidilutive shares excluded from diluted earnings per share computations were as follows:


	Three Months Ended February 28/29,
(in millions)	2021	2020
Equity awards	3	1
Convertible Notes	54	0
Total antidilutive securities	56	1

Equity Offering

In February 2021, we completed a public offering of 40.5 million shares of Carnival Corporation’s common stock at a price per share of $25.10, resulting in net proceeds of $996 million.

NOTE 98 – Supplemental Cash Flow Information


(in millions)	(in millions)	February 29, 2020		November 30, 2019		(in millions)	February 28, 2021		November 30, 2020
Cash and cash equivalents (Consolidated Balance Sheets)	Cash and cash equivalents (Consolidated Balance Sheets)	$	1,354	$	518	Cash and cash equivalents (Consolidated Balance Sheets)	$	9,674	$	9,513
Restricted cash included in prepaid expenses and other and other assets	Restricted cash included in prepaid expenses and other and other assets	15		13		Restricted cash included in prepaid expenses and other and other assets	155		179
Total cash, cash equivalents and restricted cash (Consolidated Statements of Cash Flows)	Total cash, cash equivalents and restricted cash (Consolidated Statements of Cash Flows)	$	1,368	$	530	Total cash, cash equivalents and restricted cash (Consolidated Statements of Cash Flows)	$	9,829	$	9,692

NOTE 9 – Other Assets

We ~~did not issue notes receivable upon sale~~have a minority interest in the White Pass & Yukon Route (“White Pass”) that includes port, railroad and retail operations

in Skagway, Alaska. As a result of ~~ships~~the effects of COVID-19 on the 2021 Alaska season, we evaluated whether our investment in White Pass was other than temporarily impaired and performed an impairment assessment during the ~~three months~~quarter ended February ~~29/~~28, 2021. As a result of our assessment, we recognized an impairment charge of $17 million for our investment in White Pass in other income (expense), net. As of February 28, 2021, our investment in White Pass was $76 million, consisting of $57 million in equity and a loan of $19 million. As of November 30, 2020, our investment in White Pass was $94 million, consisting of $75 million in equity and ~~2019.~~

~~NOTE 10 – Other Assets~~a loan of $19 million.

We have a minority interest in CSSC Carnival Cruise Shipping Limited (“CSSC-Carnival”), a China-based cruise company which will operate its own fleet designed to serve the Chinese market. Our investment in CSSC-Carnival was ~~$132~~$139 million as of February ~~29, 2020~~28, 2021 and ~~$48~~$140 million as of November 30, ~~2019.~~2020. In December 2019, we sold to CSSC-Carnival a controlling interest in an entity with full ownership of 2 EA segment ships and recognized a related gain of $107 million, included in other operating expenses in our Consolidated Statements of Income (Loss). ~~We will continue to operate both ships under bareboat charter agreements into 2021.~~As of February 28, 2021 and November 30, 2020, our investment in the minority interest of this entity was $283 million.

NOTE 1110 – ~~Subsequent Events~~Property and Equipment

The spread of COVID-19 and the recent developments surrounding the global pandemic are having material negative impacts on all aspects of our business. On March 13, 2020, we announced voluntary pauses of our global fleet cruise operations across all brands. The duration of the pauses will be dependent in part on various travel restrictions and travel bans issued by countries around the world.Ship Sales

AsSince the pause in guest cruise operations, we have accelerated the removal of ~~April 1, 2020, substantially all our~~ ships ~~have disembarked their passengers. There are approximately 6,000 passengers onboard ships still at sea that are~~which were previously expected to ~~disembark their passengers by~~be sold over the ~~end~~ensuing years. During the first quarter of ~~April. Some~~2021, we completed the sale of 1 NAA segment ship, which represents a passenger-capacity reduction of 670 for our ~~crew is unable to return home, and we will be providing them with food and housing.~~NAA segment.

We have updated our cancellation policies, the terms of which vary widely by brand and sailing date, to permit cruisers to cancel certain upcoming cruises and elect to receive refunds in cash or future cruise credits. As an incentive to accept the future cruise credits, our brands have offerings which vary widely in terms but generally increase the value of the future cruise credits or onboard credits (credits that can be used as onboard spending money on a future sailing). The volume and pace of cash refunds could have a material adverse effect on our liquidity and capital resources.

Significant events affecting travel, including COVID-19, typically have an impact on booking patterns, with the full extent of the impact generally determined by the length of time the event influences travel decisions. We believe the ongoing effects of COVID-19 on our operations and global bookings have had, and will continue to have, a material negative impact on our financial results and liquidity, and such negative impact may continue well beyond the containment of such outbreak. We have never previously experienced a complete cessation of our cruising operations, and as a consequence, our ability to be predictive regarding the impact of such a cessation on our brands and future prospects is uncertain. In addition, the magnitude, duration and speed of the global pandemic is uncertain. As a consequence, we cannot estimate the impact on our business, financial condition or near- or longer-term financial or operational results with certainty, but we expect a net loss on both a U.S. GAAP and adjusted basis for the fiscal year ending November 30, 2020.

~~The effects of further decreases in estimated future operating cash flows could result in the need to recognize additional impairment charges in future periods.~~

In March and April 2020, Moody’s and S&P Global downgraded our long-term issuer and senior unsecured debt ratings. In addition, our long-term ratings were placed on review for further downgrade by both rating agencies. Our short-term commercial paper credit ratings were downgraded and also placed on review for further downgrade.

~~In March 2020, we fully drew down our $3.0 billion Existing Multicurrency Facility.~~

In March 2020, we early settled all outstanding cross currency swaps designated as net investment hedges and received proceeds of $180 million, of which $167 million will remain in AOCI until either the sale or substantially complete liquidation of the related subsidiary. We also early settled our foreign currency forwards that were designated as cash flow hedges and

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~~received proceeds of $53 million which will remain in AOCI until recognized in earnings proportionately to the related depreciation expense of the underlying vessel that was hedged.~~

On April 1, 2020, we announced the pricing terms of offerings of $4.0 billion of the Secured Notes, $1.75 billion Convertible Notes and a public offering of $500 million of common stock in the Public Equity Offering. In connection with the Convertible Notes offering, we granted the initial purchasers of the Convertible Notes an option to purchase on or before April 18, 2020, up to an additional $262.5 million aggregate principal amount of Convertible Notes. In connection with the Public Equity Offering, we granted the underwriters an option to purchase up to 9,375,000 of additional shares of common stock, which option must be exercised on or before May 1, 2020.

The Secured Notes will pay interest semi-annually on April 1 and October 1 of each year, beginning on October 1, 2020, at a rate of 11.5% per year. The Secured Notes will mature on April 1, 2023. The Convertible Notes will pay interest semi-annually on April 1 and October 1 of each year, beginning on October 1, 2020, at a rate of 5.75% per year. The Convertible Notes will mature on April 1, 2023, unless earlier converted, redeemed or repurchased. The initial conversion rate per $1,000 principal amount of Convertible Notes is equivalent to 100 shares of common stock of the Corporation, which is equivalent to a conversion price of approximately $10 per share, subject to adjustment in certain circumstances.

~~The Public Equity Offering consists of 62,500,000 shares of common stock, par value $0.01 per share, of Carnival Corporation, at a price of $8 per share.~~

The Public Equity Offering, the Convertible Notes offering and the Secured Notes offering are expected to be completed in early April, subject to customary closing conditions. The net proceeds from the offering of Secured Notes will be deposited in to a segregated escrow account, pending the releases in accordance with certain collateral perfection thresholds. None of the closings of the Public Equity Offering and the offerings of the Secured Notes or the Convertible Notes is conditioned upon the closing of any of the other offerings or vice versa.

~~One of our directors purchased 1.25 million shares of our common stock as part of the Public Equity Offering for a purchase price of approximately $10 million.~~

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Cautionary Note Concerning Factors That May Affect Future Results

Some of the statements, estimates or projections contained in this document are “forward-looking statements” that involve risks, uncertainties and assumptions with respect to us, including some statements concerning future results, operations, outlooks, plans, goals, reputation, cash flows, liquidity and other events which have not yet occurred. These statements are intended to qualify for the safe harbors from liability provided by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical facts are statements that could be deemed forward-looking. These statements are based on current expectations, estimates, forecasts and projections about our business and the industry in which we operate and the beliefs and assumptions of our management. We have tried, whenever possible, to identify these statements by using words like “will,” “may,” “could,” “should,” “would,” “believe,” “depends,” “expect,” “goal,” “anticipate,” “forecast,” “project,” “future,” “intend,” “plan,” “estimate,” “target,” “indicate,” “outlook,” and similar expressions of future intent or the negative of such terms.

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


•~~Net revenue yields~~Pricing			•Estimates of ship depreciable lives and residual values
•Booking levels			•Goodwill, ship and trademark fair values
•~~Pricing and occupancy~~Occupancy			•Liquidity and credit ratings
•Interest, tax and fuel expenses			•Adjusted earnings per share
•Currency exchange rates			•Impact of the COVID-19 coronavirus global pandemic on our financial condition and results of operations
•~~Net cruise costs, excluding fuel per available lower berth day~~

Because forward-looking statements involve risks and uncertainties, there are many factors that could cause our actual results, performance or achievements to differ materially from those expressed or implied by our forward-looking statements. This note contains important cautionary statements of the known factors that we consider could materially affect the accuracy of our ~~forward looking~~forward-looking statements and adversely affect our business, results of operations and financial position. Additionally, many of these risks and uncertainties are currently amplified by and will continue to be amplified by, or in the future may be amplified by, the COVID-19 outbreak. It is not possible to predict or identify all such risks. There may be additional risks that we consider immaterial or which are unknown. These factors include, but are not limited to, the following:

•COVID-19 has had, and is expected to continue to have, a significant impact on our financial condition and operations, which impacts our ability to obtain acceptable financing to fund resulting reductions in cash from operations. The current, and uncertain future, impact of the COVID-19 outbreak, including its effect on the ability or desire of people to travel (including on cruises), is expected to continue to impact our results, operations, outlooks, plans, goals, ~~growth,~~ reputation, litigation, cash flows, liquidity, and stock ~~price~~price.

•As a result of the COVID-19 outbreak, we ~~have paused our global fleet cruise operations, and if we are unable to re-commence normal operations in the near-term, we~~ may be out of compliance with aone or more maintenance ~~covenant~~covenants in certain of our debt facilities, with the next testing date of November 30, 2022.

•World events impacting the ability or desire of people to travel have and may continue to lead to a decline in demand for ~~cruises~~cruises.

•Incidents concerning our ships, guests or the cruise vacation industry as well as adverse weather conditions and other natural disasters have in the past and may, in the future, impact the satisfaction of our guests and crew and lead to reputational ~~damage~~damage.

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

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

•Ability to recruit, develop and retain qualified shipboard personnel who live away from home for extended periods of time may adversely impact our business operations, guest services and ~~satisfaction~~satisfaction.

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

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

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

•~~Geographic regions in which we try to expand our business may be slow to develop or ultimately not develop how we expect~~options.

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

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

Forward-looking statements should not be relied upon as a prediction of actual results. Subject to any continuing obligations under applicable law or any relevant stock exchange rules, we expressly disclaim any obligation to disseminate, after the date of this document, any updates or revisions to any such forward-looking statements to reflect any change in expectations or events, conditions or circumstances on which any such statements are based.

Recent Developments

~~COVID-19~~Resumption of Guest Operations

The ~~spread~~company is uniquely positioned for a phased resumption in cruise travel given its multiple brands which can each be restarted independently and tailored to the environment of ~~novel coronavirus (COVID-19)~~their respective source market. AIDA Cruises (“AIDA”) resumed guest cruise operations in late March sailing in the Canary Islands. Costa Cruises (“Costa”) expects to resume operations in May sailing to Italian ports. P&O Cruises (UK), Cunard and Princess Cruises will each offer a series of cruises this summer sailing around UK coastal waters with P&O Cruises (UK) kicking off the ~~recent developments surrounding the global pandemic are having material negative impacts on all aspects~~season in June followed by Cunard and Princess Cruises in July. Seabourn also expects to resume guest cruise operations this summer sailing from Greece. In addition, this summer Holland America Line and Princess Cruises expect to offer land-based vacation options for travelers to experience Alaska through a combination of ~~our business. In particular:~~tours, lodging and sightseeing.

•~~Numerous passengers~~Health and ~~crew on~~ ~~Diamond Princess~~ were diagnosed with COVID-19 and the ship was quarantined at a port in Japan. As of the time of disembarkation, a substantial portion of the passengers and crew were diagnosed with COVID-19 and subsequently several passengers died due to the disease.~~Additionally, numerous passengers and crew on~~ ~~Grand Princess~~ ~~were diagnosed with COVID-19, some of whom subsequently died due to the disease.~~Safety Protocols

•~~Numerous passengers~~Initial cruises are taking place with adjusted passenger capacity and ~~crew on other ships, including~~ ~~Zaandam~~, ~~Costa Luminosa~~, ~~Ruby Princess~~, ~~Costa Magica~~enhanced health protocols developed with government and ~~Costa Favolosa, have~~health authorities, and guidance from the company's roster of medical and scientific experts. The company has been ~~diagnosed with COVID-19. Numerous passengers and crew on~~ ~~Zandaam~~ ~~are currently experiencing flu-like symptoms, and some have died.~~ ~~Costa Magica~~ ~~and Costa Favolosa~~ ~~are currently~~ working with ~~the U.S. Coast Guard~~a number of world-leading public health, epidemiological and policy experts to ~~facilitate medical evacuations,~~support its ongoing efforts with enhanced health and ~~both vessels are anchored near the port of Miami.~~

•~~On March 13, 2020, we announced voluntary pauses of our global fleet cruise operations by our continental European~~safety protocols to help protect against and North American brands. Subsequently, we implemented a voluntary pause of our global fleet cruise operations across all brands. Each brand has separately announced the duration of its pause, but we expect such pauses to be extended (and some extensions have already been announced) and any such extensions may be prolonged. The pauses will be dependent in part on various travel restrictions and travel bans issued by various countries around the world.

•~~As of April 1, 2020:~~

◦Substantially all our ships have disembarked their passengers. There are approximately 6,000 passengers onboard ships still at sea that are expected to disembark their passengers by the end of April. Some of our crew is unable to return home, and we will be providing them with food and housing.

◦We have updated our cancellation policies, the terms of which vary widely by brand and sailing date, to permit cruisers to cancel certain upcoming cruises and elect to receive refunds in cash or future cruise credits. As an incentive to accept the future cruise credits, our brands have offerings which vary widely in terms but generally increase the value of the future cruise credits or onboard credits (credits that can be used as onboard spending money on a future sailing).~~The volume and pace of cash refunds could have a material adverse effect on our liquidity and capital resources.~~

•For the seven week period beginning January 26, 2020 and ending March 15, 2020, booking volumes for the remainder of 2020 were significantly behind the prior year on a comparable basis as a result of the effects of COVID-19. As of March 15, 2020, cumulative advanced bookings for the remainder of 2020 were meaningfully lower

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than the prior year and at prices that are considerably lower than the prior year on a comparable basis. As noted above, all of our global fleet operations are subject to voluntary pauses that we expect to be extended. Due to the unknown length of the pauses, booking volume data for 2020 may not be informative. In addition, because of our updated cancellation policies, booking volumes may not be representative of actual cruise revenues.

•For the first half of 2021, booking volumes since mid-December 2019 through March 1, 2020, were running slightly higher than the prior year. In contrast, for the first half of 2021 and during the two weeks ended March 15, 2020, we booked 546,000 Occupied Lower Berth Days, which was considerably behind the prior year pace. As of March 15, 2020, cumulative advanced bookings for the first half of 2021 were slightly lower than the prior year.

As of February 29, 2020, we had a total of 16 cruise ships scheduled to be delivered through 2025, including four during the remainder of fiscal 2020. We believe the effects of COVID-19 on the shipyards where our ships are under construction will result in delays in ship deliveries, which we cannot predict and may be prolonged.

~~On March 13, 2020, we~~ ~~fully drew down our $3.0 billion Existing Multicurrency Facility. On March 24, 2020, we settled derivatives in a net gain position of approximately $200 million. Consequently,~~ ~~as of the date hereof, our principal source of immediate liquidity includes our available cash and cash equivalents.Given~~mitigate the impact of COVID-19 during cruise vacations. The company's brands have a comprehensive set of health and hygiene protocols that facilitate a safe and healthy return to cruise vacations. These enhanced protocols are modeled after shoreside health and mitigation guidelines as provided by each brand's respective country, and approved by all relevant regulatory authorities. Protocols will be updated based on ~~bookings, which are meaningfully reduced from the prior year comparative pace,~~evolving scientific and ~~the pause of our global fleet cruise operations, which we expect~~medical knowledge related to ~~be extended, we~~ ~~are pursuing additional financing, including, but not limited~~mitigation strategies. In addition to the ~~April 1 financing transactions~~

~~described~~jurisdictions associated with the restart plans noted above, the company continues to work closely with governments and health authorities in other parts of the ~~next paragraph.~~world to ensure that its health and safety protocols will also comply with the requirements of each location.

~~In addition, we had~~ ~~$2.8 billion from four committed export credit facilities that are available~~Refer to ~~fund the originally planned ship deliveries for the remainder of 2020~~“Liquidity, Financial Condition and ~~$5.9 billion from committed export credit facilities that are available to fund ship deliveries originally planned in 2021 and beyond~~.

To enhance our liquidity, as well as comply with the dividend restrictions contained in the Secured Notes, we have suspended the payment of dividends on, and the repurchase of, the common stock of Carnival Corporation and the ordinary shares of Carnival plc.

We cannot assure you that our assumptions used to estimate our liquidity requirements will be correct because we have never previously experienced a complete cessation of our cruising operations, and as a consequence, our ability to be predictive is uncertain.~~However, based on our assumptions and estimates with respect to the pause in our global~~ fleet cruise operations and our financial condition, we believe that the liquidity described in the preceding paragraphs will be sufficient to fund our liquidity requirements over at least the next twelve months. We estimate our liquidity requirements, which include our ongoing ship and administrative operating costs, cash refunds of customer deposits, debt maturities and interest, expected capital improvements, and new ship growth capital not addressed by committed export credit facilities, to be approximately, on average, $1.0 billion per month. In particular:

•~~Ongoing ship and administrative operating costs~~ - During the pause in our global fleet cruise operations, certain of our ships will be in warm ship layup where the ship will be manned by a full crew and certain of our ships will be in a prolonged ship layup where the ship will be manned by a limited crew.We estimate the cost per warm ship layup is approximately $2 million to $3 million per month and the cost per prolonged ship layup is approximately $1 million per month. We will decide whether each vessel in our global fleet will be in a warm ship layup or a prolonged ship layup depending on the circumstances, including the length of pause, which we expect to be extended and may be prolonged. We currently estimate the substantial majority of our fleet will be in prolonged ship layup.In addition, we expect to incur ongoing selling and administrative expenses, and incremental COVID-related costs associated with sanitizing our ships and defending lawsuits, although we anticipate substantially reducing our advertising spend during

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~~the pause in operations. After transitioning to a prolonged pause, we anticipate estimated ongoing ship and administrative operating costs to range from $200 million to $300 million per month.~~

•~~Cash refunds of customer deposits~~ - During the pause in our global fleet cruise operations, we expect to be required to pay cash refunds of customer deposits with respect to a portion of our cancelled cruises. The current portion of our customer deposits was $4.7 billion as of February 29, 2020. Depending on the length of the pause and level of guest acceptance of future cruise credits, we may be required to provide cash refunds for a substantial portion of the balance. For the two weeks ended March 15, 2020, and on a weighted average basis based on available lower berth days (“ALBD”), approximately 45% of the guests who have contacted us have accepted future cruise credits in lieu of cash refunds for cancelled voyages. We continue to take future bookings for 2020 and 2021, receiving customer deposits on those bookings.

•~~Debt maturities and interest~~ - As of February 29, 2020, the current portion of our long-term debt was $2.2 billion. The current portion of our long-term debt as of February 29, 2020 that was maturing on or prior to November 30, 2020 was $1.5 billion. In addition, on March 13, 2020 we fully drew down our $3.0 billion ~~Existing Multicurrency Facility, which amounts are currently due in September 2020 and which we currently expect to repay and redraw, in whole or in part.~~Our approximately $200 million per year interest expense for the year ended November 30, 2019 will be increased by the additional interest accrued under the $4.0 billion of Secured Notes and $1.75 billion of Convertible Notes.

In addition to pursuing additional financing, we are taking additional actions to improve our liquidity, including capital expenditure and operating expense reductions. In particular, we have identified approximately $1.0 billion of reduction opportunities from our previously disclosed estimated fiscal 2020 capital expenditures (which reduction does not take into account the impact on timing of payments in connection with new ship build as a result of the delays in ship deliveries discussed above).We have also identified various projects and initiatives within our selling and administrative expenses for reduction or elimination, which we expect will result in reduced cash outflows and cost savings. While we cannot guarantee an outcome, we also intend to pursue deferrals of existing debt maturities, including through available government programs.

We have never previously experienced a complete cessation of our cruising operations, and as a consequence, our ability to be predictive regarding the impact of such a cessation on our brands and future prospects is uncertain. In addition, the magnitude, duration and speed of the global pandemic is uncertain. As a consequence, we cannot estimate the impact on our business, financial condition or near- or longer-term financial or operational results with certainty, but we expect a net loss on both a U.S. GAAP and adjusted basis for the fiscal year ending November 30, 2020.Capital Resources.”

Refer to “Risk Factors” - "“COVID-19 has had, and is expected to continue to have, a ~~materially adverse~~significant impact on our financial condition and operations, which impacts our ability to obtain acceptable financing to fund ~~any~~ resulting ~~shortfalls~~reductions in cash from operations. The current, and uncertain future, impact of the COVID-19 outbreak, including its effect on the ability or desire of people to travel (including on cruises), is expected to continue to impact our results, operations, outlooks, plans, goals, ~~growth,~~ reputation, litigation, cash flows, liquidity, and stock ~~price".~~price.”

New Accounting Pronouncements

Refer to ~~our~~Note 1 - “General, Accounting Pronouncements” of the consolidated financial statements for ~~further information on~~ ~~New Accounting Pronouncements~~.additional discussion regarding accounting pronouncements.

Critical Accounting Estimates

For a discussion of our critical accounting estimates, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” that is included in the Form 10-K. ~~A discussion of our impairment charges recognized during the first quarter of 2020 for goodwill and ship impairment is included in the accompanying consolidated financial statements.~~

~~Refer to Note 11 - “Subsequent Events” in our consolidated financial statements.~~

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Seasonality

Our passenger ticket revenues are seasonal. Historically, demand for cruises has been greatest during our third quarter, which includes the Northern Hemisphere summer ~~months.~~months, although 2021 will continue to be adversely impacted by COVID-19. This higher demand during the third quarter results in higher ticket prices and occupancy levels and, accordingly, the largest share of our operating income is earned during this period. ~~The seasonality of our results also increases due to ships being taken out-of-service for maintenance, which we schedule during non-peak demand periods.~~This historical trend has been disrupted by the pause in global cruise operations. In addition, substantially all of Holland America Princess Alaska Tours’ revenue and net income (loss) is generated from May through September in conjunction with Alaska's cruise season. During 2021, the Alaska cruise season will continue to be adversely impacted by the effects of COVID-19.

Statistical Information


	Three Months Ended February 28/29,
	2021		2020
Fuel consumption in metric tons (in thousands)	262		831
Fuel cost per metric ton consumed	$	392	$	477

Currencies (USD to 1)
AUD	$	0.77	$	0.68
CAD	$	0.78	$	0.76
EUR	$	1.21	$	1.10
GBP	$	1.36	$	1.31
RMB	$	0.15	$	0.14

We paused our guest cruise operations in mid-March 2020 and have been in a pause for a majority of 2020 and the first quarter of 2021. The pause in guest cruise operations is continuing to have material negative impacts on all aspects of our business, including the above statistical information.

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Results of Operations


Consolidated
	Three Months Ended February 28/29,						% increase (decrease)
(in millions)	2021		2020		Change
Revenues
Passenger ticket	$	3	$	3,234	$	(3,231)	(100)	%
Onboard and other	23		1,556		(1,533)		(99)	%
	26		4,789		(4,764)		(99)	%
Operating Costs and Expenses
Commissions, transportation and other	15		766		(752)		(98)	%
Onboard and other	7		471		(464)		(99)	%
Payroll and related	218		610		(392)		(64)	%
Fuel	103		396		(294)		(74)	%
Food	11		277		(266)		(96)	%
Ship and other impairments	—		330		(330)		(100)	%
Other operating	181		671		(490)		(73)	%
	535		3,523		(2,988)		(85)	%

Selling and administrative	462		678		(216)		(32)	%
Depreciation and amortization	552		570		(18)		(3)	%
Goodwill impairment	—		731		(731)		(100)	%
	1,549		5,502		(3,953)		(72)	%
Operating Income (Loss)	$	(1,524)	$	(713)	$	(810)	114	%


NAA
	Three Months Ended February 28/29,						% increase (decrease)
(in millions)	2021		2020		Change
Revenues
Passenger ticket	$	—	$	2,052	$	(2,053)	(100)	%
Onboard and other	11		1,088		(1,078)		(99)	%
	10		3,140		(3,130)		(100)	%

Operating Costs and Expenses	316		2,274		(1,958)		(86)	%
Selling and administrative	220		400		(180)		(45)	%
Depreciation and amortization	334		364		(30)		(8)	%
Goodwill impairment	—		300		(300)		(100)	%
	870		3,337		(2,468)		(74)	%
Operating Income (Loss)	$	(859)	$	(197)	$	(663)	337	%

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EA
	Three Months Ended February 28/29,						% increase (decrease)
(in millions)	2021		2020		Change
Revenues
Passenger ticket	$	3	$	1,213	$	(1,210)	(100)	%
Onboard and other	5		339		(334)		(99)	%
	8		1,552		(1,544)		(99)	%

Operating Costs and Expenses	198		1,317		(1,119)		(85)	%
Selling and administrative	108		207		(99)		(48)	%
Depreciation and amortization	184		166		18		11	%
Goodwill impairment	—		431		(431)		(100)	%
	490		2,121		(1,631)		(77)	%
Operating Income (Loss)	$	(482)	$	(569)	$	87	(15)	%

~~Statistical Information~~

Three Months Ended February 29/28,
2020 2019
Available Lower Berth Days (“ALBDs”) (in thousands) (a) (b) 21,977 21,299
Occupancy percentage (c) 104.3 % 104.8 %
Passengers carried (in thousands) 3,063 2,937
Fuel consumption in metric tons (in thousands) 831 830
Fuel consumption in metric tons per thousand ALBDs 37.8 38.9
Fuel cost per metric ton consumed $ 477 $ 459
Currencies (USD to 1)
AUD $ 0.68 $ 0.72
CAD $ 0.76 $ 0.75
EUR $ 1.10 $ 1.14
GBP $ 1.31 $ 1.28
RMB $ 0.14 $ 0.15
We paused our guest cruise operations in mid-March 2020. We resumed limited guest cruise operations in September 2020 as part of our phased return to service. As of February 28, 2021, none of our ships were operating with guests onboard. The pause in guest cruise operations is continuing to have material negative impacts on all aspects of our business. The longer the pause in guest operations continues, the greater the impact on our liquidity and financial position.

~~(a)ALBD is~~As a ~~standard measure~~result of ~~passenger capacity~~the pause in our guest cruise operations, we have experienced essentially no revenue for the period that we use to approximate rate and capacity variances, based on consistently applied formulas that we use to perform analyses to determine the main non-capacity driven factors that cause our cruise revenues and expenses to vary. ALBDs assume that each cabin we offer for sale accommodates two passengers and is computed by multiplying passenger capacity by revenue-producing ship operating days in the period.

~~(b)For the three months ended February 29, 2020 compared to~~ the three months ended February 28, ~~2019, we had~~2021. This has resulted in an operating loss for the current period. The pause in guest cruise operations continues to have a ~~3.2% capacity increase in ALBDs comprised~~material negative impact on all aspects of our business, including our liquidity, financial position and results of operations. We continue to expect a ~~1.4% capacity increase in our NAA segment~~net loss on both a U.S. GAAP and ~~a 6.3% capacity increase in our EA segment.~~adjusted basis for the second quarter of 2021 and the full year ending November 30, 2021.

~~Our NAA segment’s capacity increase was caused~~While maintaining compliance, environmental protection and safety, we significantly reduced ship operating expenses, including cruise payroll and related expenses, food, fuel, insurance and port charges by ~~the impacts of:~~

•~~One Holland America Line 2,670-passenger capacity~~transitioning ships into paused status, either at anchor or in port and staffed at a safe manning level. We continue to identify and implement actions to optimize our ongoing ship ~~that entered into service in December 2018~~

•~~One Princess Cruises 3,660-passenger capacity ship that entered into service in October 2019~~

•~~One Carnival Cruise Line 4,010-passenger capacity ship that entered into service in December 2019~~operating expenses.

~~The increase in~~As we continue to resume guest cruise operations, we expect to incur incremental spend relating to bringing our ~~NAA segment’s capacity was partially offset by the impacts of:~~

•~~One P&O Cruises (Australia) 1,680-passenger capacity ship removed from service in March 2019~~

•~~One P&O Cruises (Australia) 1,260-passenger capacity ship removed from service in April 2019~~

•~~One Holland America Line 840-passenger capacity ship removed from service in July 2019~~

•~~Five~~ ships out of ~~service related~~pause status, returning crew members to our ships and implementing the ~~ongoing COVID-19 outbreak in February 2020~~enhanced health and safety protocols.

~~Our EA segment’s capacity increase was caused by~~There were no goodwill or ship impairment charges for the ~~impacts of:~~

•~~One AIDA 5,230-passenger capacity ship that entered into service in December 2018~~

•~~One Costa Cruises 4,200-passenger capacity ship that entered into service in March 2019~~

•~~One Costa Cruises 5,220-passenger capacity ship that entered into service in December 2019~~

~~The increase in our EA segment’s capacity was partially offset by the impacts of:~~

•~~One P&O UK 1,880-passenger capacity ship removed from service in August 2019~~

•~~Six ships out of service related to the ongoing COVID-19 outbreak in February 2020~~

~~(c) In accordance with cruise industry practice, occupancy is calculated using a denominator of ALBDs, which assumes two passengers per cabin even though some cabins can accommodate~~ three ~~or more passengers. Percentages in excess of 100% indicate that on average more than two passengers occupied some cabins.~~

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~~Three Months Ended February 29, 2020 (“2020”) Compared to Three Months Ended~~months ended February 28, ~~2019 (“2019”)~~

~~Revenues~~

~~Consolidated~~

~~Passenger ticket revenues made up 68% of our 2020 total revenues. Passenger ticket revenues increased by $35 million, or 1.1%, to $3.2 billion in 2020 from $3.2 billion in 2019.~~

~~This increase was caused by:~~

•~~$102 million - 3.2% capacity increase in ALBDs, net of $78 million as~~2021. As a result of ~~cancelled voyages and other voyage disruptions directly related to COVID-19~~

•~~$32 million - increase in other revenues~~

•~~$15 million - increase in air transportation revenues~~

~~These increases were partially offset by:~~

•~~$91 million - decrease in cruise ticket revenues, primarily driven by sourcing in Continental Europe and net unfavorable foreign currency transactional impact~~

•~~$24 million - net unfavorable foreign currency translational impact~~

~~Onboard and other revenues made up 32% of our 2020 total revenues. Onboard and other revenues increased by $82 million, or 5.5%, to $1.6 billion in 2020 from $1.5 billion in 2019.~~

~~This increase was caused by:~~

•~~$46 million - 3.2% capacity increase in ALBDs, net of $41 million as a result of cancelled voyages and other voyage disruptions directly related to COVID-19~~

•~~$29 million - higher onboard spending by our guests~~

•~~$26 million - increase in sales of Advanced Air Quality Systems to third parties~~

~~Concession revenues, which are included in onboard and other revenues, increased by $2 million, or 0.7%, to $257 million in 2020 from $255 million in 2019.~~

~~NAA Segment~~

~~Passenger ticket revenues made up 65% of our NAA segment’s 2020 total revenues. Passenger ticket revenues increased by $39 million, or 1.9%, to $2.1 billion in 2020 from $2.0 billion in 2019.~~

~~This increase was caused by:~~

•~~$29 million - 1.4% capacity increase in ALBDs, net of $34 million as a result of cancelled voyages and other voyage disruptions directly related to COVID-19~~

•~~$24 million - increase in other revenues~~

~~These increases were partially offset by $14 million decrease in cruise ticket revenues, primarily driven by net unfavorable foreign currency transactional impact~~

The remaining 35% of our NAA segment’s 2020 total revenues were comprised of onboard and other revenues, which increased by $25 million, or 2.3%, to $1.1 billion in 2020 compared to $1.1 billion in 2019.

~~This increase was caused by:~~

•~~$15 million - 1.4% capacity increase in ALBDs, net of $19 million as a result of cancelled voyages and other voyage disruptions directly related to COVID-19~~

•~~$13 million - higher onboard spending by our guests~~

~~Concession revenues, which are included in onboard and other revenues, increased by $1 million, or 0.8%, to $183 million in 2020 from $182 million in 2019.~~

~~Table of Contents~~

~~EA Segment~~

~~Passenger ticket revenues made up 78% of our EA segment’s 2020 total revenues. Passenger ticket revenues increased by $16 million, or 1.3%, to $1.2 billion in 2020 compared to $1.2 billion in 2019.~~

~~This increase was caused by:~~

•~~$75 million - 6.3% capacity increase in ALBDs, net of $41 million, as a result of cancelled voyages and other voyage disruptions directly related to COVID-19~~

•~~$9 million - increase in air transportation revenues~~

~~These increases were partially offset by:~~

•~~$36 million - decrease in cruise ticket revenues, primarily driven by sourcing in Continental Europe~~

•~~$22 million - net unfavorable foreign currency translational impact~~

•~~$17 million - decrease in occupancy primarily related to the effects of COVID-19~~

The remaining 22% of our EA segment’s 2020 total revenues were comprised of onboard and other revenues, which increased by $10 million, or 3%, to $339 million in 2020 from $329 million in 2019. This increase was caused by $21 million, or 6.3% capacity increase in ALBDs, net of $15 million as a result of cancelled voyages and other voyage disruptions directly related to COVID-19.

~~Concession revenues, which are included in onboard and other revenues, was $73 million in 2020 and 2019.~~

~~Costs and Expenses~~

~~Consolidated~~

~~Operating costs and expenses increased by $381 million, or 12%, to $3.5 billion in 2020 from $3.1 billion in 2019.~~

~~This increase was caused by:~~

•~~$330 million - impairment of ships, resulting from~~ the effects of COVID-19 on our expected future operating cash flows,

•~~$99 million - 3.2% capacity increase in ALBDs~~

•~~$46 million - increase in commissions, transportation and other expenses which includes expenses incurred as a result of cancelled voyages and other voyage disruptions directly related to COVID-19~~

•~~$45 million - changes in fuel mix~~

•~~$35 million - voyage related operating costs incurred in connection with disrupted voyages directly related to COVID-19~~

•~~$26 million - higher cruise payroll and related expenses~~

~~These increases were partially offset by:~~

•~~$132 million - gains on ship sales in 2020, net of gains on ship sales in 2019~~

•~~$30 million - lower fuel prices~~

•~~$29 million - net favorable foreign currency translational impact~~

•~~$16 million - lower dry-dock expenses and repair and maintenance expenses~~

•~~$11 million - lower fuel consumption per ALBD~~

~~Selling and administrative expenses increased by $49 million, or 7.9%, to $678 million in 2020 from $629 million in 2019.~~

Depreciation and amortization expenses increased by $54 million, or 10%, to $570 million in 2020 from $516 million in 2019. This increase was caused by an increase in the net book value of ships in service.

~~Goodwill~~ we recognized goodwill impairment charges of $731 million ~~recognized during~~and ship impairment charges of $330 million for the ~~first quarter of 2020, resulting from the effects of COVID-19 on our expected future operating cash flows.~~three months ended February 29, 2020.

~~Table of Contents~~

~~NAA Segment~~Nonoperating Income (Expense)

~~Operating costs and expenses~~Interest expense, net of capitalized interest, increased by ~~$264~~$343 million ~~or 13%,~~ to ~~$2.3 billion in 2020 from $2.0 billion in 2019.~~

~~This increase was caused by:~~

•~~$172 million - impairment of ships, resulting from the effects of COVID-19 on our expected future operating cash flows~~

•~~$37 million - voyage related operating costs incurred in connection with disrupted voyages directly related to COVID-19~~

•~~$29 million - 1.4% capacity increase in ALBDs~~

•~~$22 million - increase in commissions, transportation and other expenses which includes expenses incurred as a result of cancelled voyages and other voyage disruptions directly related to COVID-19~~

•~~$21 million - changes in fuel mix~~

•~~$11 million - higher cruise payroll and related expenses~~

~~These increases were partially offset by $18 million of lower fuel prices.~~

~~Selling and administrative expenses increased by $47 million, or 13%, to $400~~$398 million in ~~2020~~2021 from ~~$353~~$55 million in ~~2019.~~

~~This increase was driven by:~~

•~~$18 million - increase in administrative expenses~~

•~~$14 million - increase in advertising and promotional expenses~~

~~Depreciation and amortization expenses increased by $36 million, or 11%, to $364 million in 2020 from $328 million in 2019. This~~2020. The increase was caused by ~~an increase~~additional debt borrowings with higher interest rates since the pause in ~~the net book value of ships in service.~~guest cruise operations.

~~Goodwill impairment charges of $300 million recognized during the first quarter of 2020, resulting from the effects of COVID-19 on our expected future operating cash flows.~~

~~EA Segment~~

~~Operating costs and expenses increased by $241 million, or 22%, to $1.3 billion in 2020 from $1.1 billion in 2019.~~

~~This increase was caused by:~~

•~~$158 million - impairment of ships, resulting from the effects of COVID-19 on our expected future operating cash flows~~

•~~$67 million - 6.3% capacity increase in ALBDs~~

•~~$19 million - increase in commissions, transportation and other expenses which includes expenses incurred as a result of cancelled voyages and other voyage disruptions directly related to COVID-19~~

•~~$17 million - changes in fuel mix~~

•~~$15 million - higher cruise payroll and related expenses~~

~~These increases were partially offset by net favorable foreign currency translational impact of $25 million.~~

~~Selling and administrative expenses increased by $1 million, or 0.7%, to $207 million in 2020 from $205 million in 2019.~~

Depreciation and amortization expenses increased by $14 million, or 10%, to $166 million in 2020 from $152 million in 2019. This increase was caused by an increase in the net book value of ships in service.

~~Goodwill impairment charges of $431 million recognized during the first quarter of 2020, resulting from the effects of COVID-19 on our expected future operating cash flows.~~

~~Operating Income (Loss)~~

Our consolidated operating income (loss) decreased by $1.1 billion to $(0.7) billion in 2020 from $0.4 billion in 2019. Our NAA segment’s operating income (loss) decreased by $583 million to $(0.2) billion in 2020 compared to $0.4 billion in 2019, and our EA segment’s operating income (loss) decreased by $662 million to $(569) million in 2020 from $93 million in 2019. These changes were primarily due to the reasons discussed above.

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Key Performance Non-GAAP Financial Indicators

The table below reconciles Adjusted net income (loss) and Adjusted EBITDA to Net income (loss) and Adjusted earnings per share to Earnings per share for the periods presented:


	Three Months Ended February 28/29,
(in millions, except per share data)	2021		2020
Net income (loss)
U.S. GAAP net income (loss)	$	(1,973)	$	(781)
(Gains) losses on ship sales and impairments	3		928
Restructuring expenses	—		—
Other	15		3
Adjusted net income (loss)	$	(1,954)	$	150
Interest expense, net of capitalized interest	398		55
Interest income	(3)		(5)
Income tax expense, net	(6)		11
Depreciation and amortization	552		570
Adjusted EBITDA	$	(1,014)	$	782
Weighted-average shares outstanding	1,095		684

Earnings per share
U.S. GAAP diluted earnings per share	$	(1.80)	$	(1.14)
(Gains) losses on ship sales and impairments	—		1.36
Restructuring expenses	—		—
Other	0.01		0.01
Adjusted earnings per share	$	(1.79)	$	0.22

Explanations of Non-GAAP Financial Measures

~~Non-GAAP Financial Measures~~

We use ~~net cruise revenues per ALBD (“net revenue yields”), net cruise costs excluding fuel per ALBD,~~ adjusted net income (loss) and adjusted earnings per share as non-GAAP financial measures of our cruise segments’ and the company’s financial performance. These non-GAAP financial measures are provided along with U.S. GAAP ~~gross cruise revenues per ALBD (“gross revenue yields”), gross cruise costs per ALBD and U.S. GAAP~~ net income (loss) and U.S. GAAP diluted earnings per share.

Net revenue yields and net cruise costs excluding fuel per ALBD enable us to separate the impact of predictable capacity or ALBD changes from price and other changes that affect our business. We believe these non-GAAP measures provide useful information to investors and expanded insight to measure our revenue and cost performance as a supplement to our U.S. GAAP consolidated financial statements.

We believe that gains and losses on ship sales, impairment charges, restructuring costs and other gains and ~~expenses~~losses are not part of our core operating business and are not an indication of our future earnings performance. Therefore, we believe it is more meaningful for these items to be excluded from our net income (loss) and earnings per share and, accordingly, we present adjusted net income (loss) and adjusted earnings per share excluding these items.

Adjusted EBITDA is a non-GAAP measure, and we believe that the presentation of Adjusted EBITDA provides additional information to investors about our operating profitability adjusted for certain non-cash items and other gains and expenses that we believe are not part of our core operating business and are not an indication of our future earnings performance. Further, we believe that the presentation of Adjusted EBITDA provides additional information to investors about our ability to operate our business in compliance with the restrictions set forth in our debt agreements. We define Adjusted EBITDA as adjusted net income (loss) adjusted for (i) interest, (ii) taxes and (iii) depreciation and amortization. There are material limitations to using Adjusted EBITDA. Adjusted EBITDA does not take into account certain significant items that directly affect our net income (loss). These limitations are best addressed by considering the economic effects of the excluded items independently, and by considering Adjusted EBITDA in conjunction with net income (loss) as calculated in accordance with U.S. GAAP.

The presentation of our non-GAAP financial information is not intended to be considered in isolation from, as substitute for, or superior to the financial information prepared in accordance with U.S. GAAP. It is possible that our non-GAAP financial measures may not be exactly comparable to the like-kind information presented by other companies, which is a potential risk associated with using these measures to compare us to other companies.

~~Net passenger ticket revenues~~ ~~reflect gross passenger ticket revenues, net of commissions, transportation and other costs.~~

~~Net onboard and other revenues~~ ~~reflect gross cruise onboard and other revenues, net of onboard and other costs.~~

~~Net revenue yields~~ is a combination of net passenger ticket revenues and net onboard and other revenues divided by ALBDs. Net revenue yields are commonly used in the cruise industry to measure a company’s cruise segment revenue performance and for revenue management purposes. We believe that net cruise revenues is a more meaningful measure in determining revenue yield than gross cruise revenues because it reflects the cruise revenues earned net of our most significant variable cost, which are travel agent commissions, costs of air and other transportation, certain other costs that are directly associated with onboard and other revenues and credit and debit card fees.

~~Net cruise costs excluding fuel~~ reflect gross cruise operating expenses as well as cruise selling and administrative expenses, and excludes fuel expenses as well as the same variable costs that are included in the calculation of net passenger ticket revenues and net onboard and other revenues to avoid duplicating these variable costs in our non-GAAP financial measures. Substantially all of our net cruise costs excluding fuel are largely fixed, except for the impact of changing prices, once the number of ALBDs has been determined.

~~Net cruise costs excluding fuel per ALBD~~ ~~is the measure we use to monitor our ability to control our cruise segments’ costs and is calculated as net cruise cost excluding fuel divided by ALBDs.~~

~~Reconciliation of Forecasted Data~~

We have not provided a reconciliation of forecasted gross cruise revenues to forecasted net cruise revenues or forecasted gross cruise costs to forecasted net cruise costs without fuel or forecasted U.S. GAAP net income (loss) to forecasted adjusted net income (loss) or forecasted U.S. GAAP diluted earnings per share to forecasted adjusted earnings per share because preparation of meaningful U.S. GAAP forecasts of gross cruise revenues, gross cruise costs, net income (loss) and earnings per share would require unreasonable effort. We are unable to predict, without unreasonable effort, the future movement of foreign exchange rates and fuel prices. We are unable to determine the future impact of gains or losses on ships sales, restructuring expenses and other non-core gains and charges.

Table of ~~Contents~~C ontents

~~Constant Currency~~

Our operations primarily utilize the U.S. dollar, Australian dollar, euro and sterling as functional currencies to measure results and financial condition. Functional currencies other than the U.S. dollar subject us to foreign currency translational risk. Our operations also have revenues and expenses that are in currencies other than their functional currency, which subject us to foreign currency transactional risk.

•~~Translational Risk:~~ The translation of our operations with functional currencies other than U.S. dollar to our U.S. dollar reporting currency results in decreases in reported U.S. dollar revenues and expenses if the U.S. dollar strengthens against these foreign currencies and increases in reported U.S. dollar revenues and expenses if the U.S. dollar weakens against these foreign currencies.

•~~Transactional Risk:~~ Our operations have revenue and expense transactions in currencies other than their functional currency. If their functional currency strengthens against these other currencies, it reduces the functional currency revenues and expenses. If the functional currency weakens against these other currencies, it increases the functional currency revenues and expenses.

Constant currency reporting removes the impact of changes in exchange rates on the translation of our operations plus the transactional impact of changes in exchange rates from revenues and expenses that are denominated in a currency other than the functional currency.

We report net revenue yields, net passenger revenue yields, net onboard and other revenue yields and net cruise costs excluding fuel per ALBD on a “constant currency” basis assuming the 2020 periods’ currency exchange rates have remained constant with the 2019 periods’ rates. This metric facilitates a comparative view for the changes in our business in an environment with fluctuating exchange rates.

~~Table of Contents~~

~~Consolidated gross and net revenue yields were computed by dividing the gross and net cruise revenues by ALBDs as follows:~~

Three Months Ended February 29/28,
(dollars in millions, except yields) 2020 2020
Constant
Currency 2019
Passenger ticket revenues $ 3,234 $ 3,199
Onboard and other revenues 1,556 1,474
Less: Tour and other revenues (52) (29)
Gross cruise revenues 4,737 4,645
Less cruise costs
Commissions, transportation and other (766) (709)
Onboard and other (471) (467)
(1,238) (1,177)
Net cruise revenues $ 3,499 $ 3,537 $ 3,468
Net passenger ticket revenues $ 2,467 $ 2,497 $ 2,490
Net onboard and other revenues $ 1,032 $ 1,039 $ 978
ALBDs 21,977,115 21,977,115 21,299,196
Gross revenue yields $ 215.53 $ 218.06
% increase (decrease) (1.2) %
Net revenue yields $ 159.22 $ 160.93 $ 162.82
% increase (decrease) (2.2) % (1.2) %
Net passenger ticket revenue yields $ 112.26 $ 113.64 $ 116.90
% increase (decrease) (4.0) % (2.8) %
Net onboard and other revenue yields $ 46.96 $ 47.30 $ 45.92
% increase (decrease) 2.3 % 3.0 %

~~Table of Contents~~

~~Consolidated gross and net cruise costs and net cruise costs excluding fuel per ALBD were computed by dividing the gross and net cruise costs and net cruise costs excluding fuel by ALBDs as follows:~~

Three Months Ended February 29/28,
(dollars in millions, except costs per ALBD) 2020 2020
Constant
Currency 2019
Operating expenses $ 3,523 $ 3,142
Selling and administrative expenses 678 629
Less tour and other expenses (26) (34)
Gross cruise costs 4,175 3,736
Less cruise costs
     Commissions, transportation and other (766) (709)
     Onboard and other (471) (467)
     Gains (losses) on ship sales and impairments (221) (2)
     Restructuring expenses — —
     Other — —
Net cruise costs 2,716 2,558
Less fuel (396) (381)
Net cruise costs excluding fuel $ 2,320 $ 2,340 $ 2,177
ALBDs 21,977,115 21,977,115 21,299,196
Gross cruise costs per ALBD $ 189.96 $ 175.40
% increase (decrease) 8.3 %
Net cruise costs excluding fuel per ALBD $ 105.57 $ 106.46 $ 102.21
% increase (decrease) 3.3 % 4.2 %

~~Table of Contents~~

~~Adjusted earnings per share was computed as follows:~~

Three Months Ended
February 29/28,
(in millions, except per share data) 2020 2019
Net income (loss)
     U.S. GAAP net income (loss) $ (781) $ 336
     (Gains) losses on ship sales and impairments 928 2
     Restructuring expenses — —
     Other 3 —
     Adjusted net income $ 150 $ 338
Weighted-average shares outstanding 684 695
Earnings per share
     U.S. GAAP diluted earnings per share $ (1.14) $ 0.48
     (Gains) losses on ship sales and impairments 1.36 —
     Restructuring expenses — —
     Other 0.01 —
     Adjusted earnings per share $ 0.22 $ 0.49

~~Net cruise revenues increased by $31 million, or 0.9%, to $3.5 billion in 2020 compared to $3.5 billion in 2019.~~

~~The increase was caused by a 3.2% capacity increase in ALBDs of $110 million, net of 2.8% of ALBDs as a result of cancelled voyages and other voyage disruptions directly related to COVD-19~~

~~This increase was partially offset by:~~

•~~$41 million - 1.2% decrease in constant currency net revenue yields, including impacts of COVID-19 as a result of cancelled voyages and other voyage disruptions~~

•~~$38 million - net unfavorable foreign currency impacts (including both the foreign currency translational and transactional impacts)~~

The 1.2% decrease in constant currency net revenue yields was due to a 2.8% decrease in constant currency net passenger ticket revenue yields, partially offset by a 3.0% increase in constant currency net onboard and other revenue yields.

This 2.8% decrease in net passenger ticket revenue yields was driven by sourcing in Continental Europe. This 2.8% decrease in net passenger ticket revenue was comprised of a 5.8% decrease from our EA segment, offset by a 0.3% increase from our NAA segment.

~~The 3.0% increase in net onboard and other revenue yields was comprised of a 1.5% increase from our NAA segment, a 0.6% increase from our EA segment and an increase to Cruise Support segment revenue.~~

~~Net cruise costs excluding fuel increased by $143 million, or 6.6%, to $2.3 billion in 2020 from $2.2 billion in 2019.~~

~~The increase was caused by:~~

•~~$93 million - 4.2% increase in constant currency net cruise costs excluding fuel, including incremental impacts of COVID-19 as a result of cancelled voyages and other voyage disruptions~~

•~~$69 million - 3.2% capacity increase in ALBDs, net of 2.8% of ALBDs as a result of cancelled voyages and other voyage disruptions directly related to COVID-19~~

~~These increases were partially offset by:~~

•~~$20 million - net favorable foreign currency impacts (including both the foreign currency translational and transactional impacts)~~

~~Fuel costs increased by $16 million, or 4.2%, to $396 million in 2020 from $381 million in 2019.~~

~~This increase was caused by:~~

•~~$45 million - changes in fuel mix~~

•~~$12 million - 3.2% capacity increase in ALBDs~~

~~These increases were partially offset by:~~

•~~$30 million - lower fuel prices~~

~~Table of Contents~~

•~~$11 million - lower fuel consumption per ALBD~~

Liquidity, Financial Condition and Capital Resources

~~Due~~We have taken, and continue to take, significant actions to preserve cash and obtain additional financing to increase our liquidity. Since the ~~spread~~start of ~~COVID-19~~the pause in guest cruise operations in March 2020, we have raised $23.6 billion through a series of transactions. Since December 2020, we have raised $6.0 billion including completing the following:

•In December 2020, we borrowed $1.5 billion under export credit facilities due in semi-annual installments through 2033.

•In February 2021, we issued an aggregate principal amount of $3.5 billion under the 2027 Senior Unsecured Notes that mature on March 1, 2027. The 2027 Senior Unsecured Notes bear interest at a rate of 5.8% per year.

•In February 2021, we completed a public offering of 40.5 million shares of Carnival Corporation’s common stock at a price per share of $25.10, resulting in net proceeds of $996 million.

•During the first quarter of 2021, we obtained waivers of compliance with the Interest Coverage Covenant and Debt to Capital Covenant in our export credit facilities through August 31, 2022 (with the next testing date of November 30, 2022) or November 30, 2022 (with the next testing date of February 28, 2023) for our funded export credit facilities with aggregate indebtedness of $8.9 billion as of February 28, 2021 and unfunded export credit facilities with an aggregate principal amount of $6.5 billion as of February 28, 2021.

•During the first quarter of 2021 we entered into supplemental agreements with respect to our Revolving Credit Facility and many of our bank loans. Under our Revolving Credit Facility and many of our bank loans, we are now required to maintain the Interest Coverage Covenant from February 28, 2023, at a ratio of not less than 2.0 to 1.0 for the February 28, 2023 and May 31, 2023 testing dates, 2.5 to 1.0 for the August 31, 2023 and November 30, 2023 testing dates, and 3.0 to 1.0 from the February 28, 2024 testing date onwards, or through their respective maturity dates, and the ~~effects~~Debt to Capital Covenant at the end of ~~growing port restrictions around~~each fiscal quarter before the ~~world, we previously announced~~November 30, 2021 testing date at a ~~voluntary pause of our global fleet cruise operations. Significant events affecting travel, including COVID-19, typically have an impact on booking patterns, with~~percentage not to exceed 65%. From the ~~full extent of~~November 30, 2021 testing date until the ~~impact generally determined by~~May 31, 2023 testing date the ~~length of time~~Debt to Capital Covenant is not to exceed 75%, following which it will be tested at levels which decline ratably to 65% from the event influences travel decisions. We believe the ongoing effects of COVID-19 on our operations and global bookings have had, and will continue to have a material negative impact on our financial results and liquidity, and such negative impact may continue well beyond the containment of such outbreak.May 31, 2024 testing date onwards.

As of February ~~29, 2020,~~28, 2021, we had ~~$3.0~~$11.5 billion of ~~immediate liquidity, which consisted of available~~ cash and cash equivalents and available borrowings under our Existing Multicurrency Facility. In addition, we had $2.8 billion from four committed export credit facilities that are available to fund the originally planned ship deliveries forshort-term investments. During the remainder of ~~this year~~fiscal 2021, the company expects to refinance debt at lower interest rates and ~~$5.9 billion from committed export credit facilities that are available~~extend maturities. Our access to ~~fund ship deliveries originally planned~~and cost of financing depend on, among other things, global economic conditions, conditions in 2021 and beyond. On March 13, 2020, we fully drew down our $3.0 billion Existing Multicurrency Facility, which amounts are currently due in September 2020. We borrowed under the Existing Multicurrency Facility in order to increase our cash position and preserve financial flexibility in light of the impact of the COVID-19 outbreak on our results of operations and liquidity.

We cannot assure you that our assumptions used to estimate our liquidity requirements will be correct because we have never previously experienced a complete cessation of our cruising operations, and as a consequence, our ability to be predictive is uncertain. In addition, the magnitude, duration and speed of the global ~~pandemic is uncertain. As a consequence, we cannot estimate~~financing markets, the ~~impact on~~availability of sufficient amounts of financing, our ~~business, financial condition or near- or longer-term financial or operational results with certainty, but we expect a net loss on both a U.S. GAAP~~prospects and ~~adjusted basis for the fiscal year ending November 30, 2020.~~

~~We are taking further actions to improve~~ our liquidity, including capital expenditure and operating expense reductions, suspending dividend payments on, and the repurchase of, the common stock of Carnival Corporation and the ordinary shares of Carnival plc and pursuing additional financing. Based on these actions and assumptions regarding the impact of COVID-19, we have concluded that we will be able to generate sufficient liquidity to satisfy our obligations and remain in compliance with our existing debt covenants for the next twelve months prior to giving effect to any additional financing that may occur.

Our monthly average cash burn rate for the first quarter of ~~3:1 ratio~~2021 was $500 million, which was better than expected primarily due to the timing of ~~EBITDA to Consolidated Net Interest Charges. If we expected~~capital expenditures. We expect our monthly average cash burn rate for the first half of 2021 to be out of compliance, we would seek waivers from the lenders prior to any covenant violation. Any covenant waiver may lead to increased costs, increased interest rates, additional restrictive covenants and other available lender protections that would be applicable. There can be no assurance that we would be able to obtain waivers in a timely manner, or on acceptable terms at all. If we were not able to obtain waivers or repay the debt facilities, this would lead to an event of default and potential acceleration of amounts due under all of our outstanding debt and derivative contract payables. As a result, the failure to obtain waivers would have a material adverse effect on us. Refer to "Risk Factors - Asapproximately $550 million, which is better than previously expected. This is a result of our efforts to optimize our monthly spend despite higher restart related spend. This monthly average cash burn rate includes ongoing ship operating and administrative expenses, estimated restart spend, working capital changes (excluding changes in customer deposits), interest expense and capital expenditures (net of export credit facilities), and excludes scheduled debt maturities as well as other cash collateral to be provided (which may increase in the ~~COVID-19 outbreak,~~future). As we ~~have paused our global fleet~~continue to resume guest cruise operations, we expect to incur incremental spend relating to bringing our ships out of pause status, returning crew members to our ships and ifimplementing the enhanced health and safety protocols. We have identified and implemented actions to optimize our monthly cash burn rate and we ~~unable~~will continue to ~~re-commence normal operations in the near-term, we may be out compliance with a maintenance covenant in certain of our debt facilities.”~~

On April 1, 2020, we announced the pricing terms of offerings of $4.0 billion of the Secured Notes, $1.75 billion of Convertible Notes and a public offering of $500 million of common stock in the Public Equity Offering. In connection with the Convertible Notes offering, we granted the initial purchasers of the Convertible Notes an option to purchase on or before April 18, 2020, up to an additional $262.5 million aggregate principal amount of Convertible Notes. In connection with the Public Equity Offering, we granted the underwriters an option to purchase up to 9,375,000 of additional shares of common stock, which option must be exercised on or before May 1, 2020.

~~Table of Contents~~

amount of Convertible Notes is equivalent to 100 shares of common stock of the Corporation, which is equivalent to a conversion price of approximately $10 per share, subject to adjustment in certain circumstances.

~~The Public Equity Offering consists of 62,500,000 shares of common stock, par value $0.01 per share, of Carnival Corporation, at a price of $8 per share.~~

~~The Public Equity Offering, the Convertible Notes offering and the Secured Notes offering are expected to be completed~~

~~in early April, subject to customary closing conditions. The net proceeds from the offering of Secured Notes will be deposited~~

in to a segregated escrow account, pending the releases in accordance with certain collateral perfection thresholds. None of the closings of the Public Equity Offering and the offerings of the Secured Notes or the Convertible Notes is conditioned upon the closing of any of the other offerings or vice versa.do so.

We had a working capital ~~deficit~~ of ~~$7.8~~$3.8 billion as of February ~~29, 2020~~28, 2021 compared to a working capital ~~deficit~~ of ~~$7.1~~$1.9 billion as of November 30, ~~2019.~~2020. The increase in working capital ~~deficit~~ was caused by an increase in ~~short-term debt and an increase in the current portion of long-term debt partially offset by an increase in~~ cash and ~~cash equivalents. We~~short-term investments. Historically, during our normal operations, we operate with a substantial working capital deficit. This deficit is mainly attributable to the fact that, under our business model, substantially all of our passenger ticket receipts are collected in advance of the applicable sailing date. These advance passenger receipts generally remain a current liability until the sailing date. The cash generated from these advance receipts is used interchangeably with cash on hand from other sources, such as our borrowings and other cash from operations. The cash received as advanced receipts can be used to fund operating expenses, pay down our debt, make long-term investments or any other use of cash. Included within our working capital ~~deficit~~ are ~~$4.7~~$1.8 billion and $1.9 billion of customer deposits as of February ~~29, 2020~~28, 2021 and November 30, ~~2019.~~2020, respectively. We have paid and expect to continue to pay cash refunds of customer deposits with respect to a portion of cancelled cruises. The amount of cash refunds to be paid may depend on the level of guest acceptance of FCCs and future cruise cancellations. We record a liability for FCCs only to the extent we have received cash from guests with bookings on cancelled sailings. In addition, we have a relatively low-level of accounts receivable and limited investment in inventories. We expect that we will ~~continue to~~ have working capital deficits in the ~~future.~~future once we return to normal guest cruise operations.

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Refer to Note 1 - “General, Liquidity and Management's Plans” of the consolidated financial statements for additional discussion regarding our liquidity.

Sources and Uses of Cash

Operating Activities

Our business ~~provided $916 million~~used $1.5 billion of net cash ~~from operations~~flows in operating activities during the three months ended February ~~29, 2020,~~28, 2021, a decrease of ~~$199 million, or 18%,~~$2.4 billion, compared to ~~$1.1 billion~~$916 million of net cash provided for the same period in ~~2019.~~2020.

Investing Activities

During the three months ended February 28, 2021, net cash used in investing activities was $3.6 billion. This was driven by the following:

•Capital expenditures of $1.7 billion for our ongoing new shipbuilding program

•Capital expenditures of $81 million for ship improvements and replacements, information technology and buildings and improvements

•Purchases of short-term investments of $1.8 billion

During the three months ended February 29, 2020, net cash used in investing activities was $1.2 billion. This was substantially due to the following:

•Capital expenditures of $861 million for our ongoing new shipbuilding program

•Capital expenditures of $399 million for ship improvements and replacements, information technology and buildings and improvements

•Proceeds from sales of ships of $226 million

•Purchase of minority interest of ~~$83~~$81 million

Financing Activities

During the three months ended February 28, ~~2019,~~2021, net cash ~~used in investing~~provided by financing activities ~~was $2.1 billion. This~~of $5.2 billion was caused by the following:

•~~Capital expenditures~~Repayments of ~~$1.7 billion for our ongoing new shipbuilding program~~$668 million of long-term debt

•~~Capital expenditures~~Issuances of ~~$428~~$5.0 billion of long-term debt, including net proceeds of $3.4 billion from the issuance of the 2027 Senior Unsecured Notes

•Net proceeds of $996 million ~~for ship improvements and replacements, information technology and buildings and improvements~~from our public equity offering of Carnival Corporation common stock

~~Financing Activities~~

During the three months ended February 29, 2020, net cash provided by financing activities of $1.1 billion was caused by the following:

•Net proceeds from short-term borrowings of $779 million in connection with our availability of, and needs for, cash at various times throughout the period

•Repayments of $132 million of long-term debt

•Issuances of $823 million of long-term debt

•Payments of cash dividends of $344 million

•Purchases of $12 million of Carnival plc ordinary shares in open market transactions under our Repurchase Program

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~~During the three months ended February 28, 2019, net cash provided by financing activities of $612 million was caused by the following:~~

•~~Net repayments of short-term borrowings of $81 million in connection with our availability of, and needs for, cash at various times throughout the period~~

•~~Repayments of $95 million of long-term debt~~

•~~Issuances of $1.4 billion of long-term debt~~

•~~Payments of cash dividends of $348 million~~

•~~Purchases of $274 million of Carnival Corporation common stock and Carnival plc ordinary shares in open market transactions under our Repurchase Program~~

~~Capital Expenditure and Capacity Forecast~~

~~Our annual capital expenditure forecast consists of contracted new ship growth capital, estimated payments for planned new ship growth capital and capital improvements.~~

(in billions) 2020 2021 2022
Annual capital expenditure forecast (a) $ 7.0 $ 5.8 $ 5.2

~~(a)As of February 29, 2020.The annual capital expenditure forecast does not reflect any changes as a result of capital expenditures reductions discussed in Note 1 - “General - Liquidity and Management's Plans.”~~

~~Our annual capacity forecast consists of contracted new ships and announced dispositions.~~

2020 2021 2022
Annual capacity increase (a) 4.3 % 7.3 % 5.1 %

~~(a)As of February 29, 2020.The capacity forecast does not reflect any changes in capacity resulting from our voluntary pause in operations.~~

Funding Sources

As of February ~~29, 2020,~~28, 2021, we had ~~$3.0~~$11.5 billion of ~~immediate liquidity, which consisted of available~~ cash and ~~cash equivalents and available borrowings under our Existing Multicurrency Facility, which is scheduled to mature in 2024.~~short-term investments. In addition, we had ~~$2.8~~$6.5 billion ~~from four committed~~of export credit facilities ~~that are available to fund the originally planned ship deliveries for the remainder of this year and $5.9 billion from committed export credit facilities that are available~~ to fund ship deliveries ~~originally~~ planned ~~in 2021 and beyond. These commitments are from numerous large and well-established banks and export credit agencies, which we believe will honor their contractual agreements with us.~~ through 2024.


(in billions)	(in billions)	2020		2021		2022		2023		(in billions)	2021		2022		2023		2024
Availability of committed future financing at February 29, 2020		$	2.8	$	2.7	$	2.3	$	0.9
Future export credit facilities at February 28, 2021 (a)										Future export credit facilities at February 28, 2021 (a)	$	0.5	$	3.4	$	1.9	$	0.6

~~Substantially all~~(a)Under the terms of these export credit facilities, we are required to comply with the Interest Coverage Covenant and the Debt to Capital Covenant, among others. We entered into supplemental agreements to waive compliance with the Interest Coverage Covenant and the Debt to Capital Covenant for our unfunded export credit facilities through August 31, 2022 or November 30, 2022, as applicable. We will be required to comply beginning with the next testing date of November 30, 2022 or February 28, 2023, as applicable.

Many of our debt agreements contain various other financial covenants, asincluding those described in Note 3 - “Debt” and in Note 5 - ~~“Unsecured Debt”~~“Debt” in the annual consolidated financial statements, which are included within our Form 10-K. At February ~~29, 2020,~~28, 2021, we were in compliance with the applicable covenants under our debt ~~covenants.~~

agreements.

Off-Balance Sheet Arrangements

We are not a party to any off-balance sheet arrangements, including guarantee contracts, retained or contingent interests, certain derivative instruments and variable interest entities that either have, or are reasonably likely to have, a current or future material effect on our consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

For a discussion of our hedging strategies and market risks, see the discussion below and Note 10 - “Fair Value Measurements, Derivative Instruments and Hedging Activities and Financial Risks” in our consolidated financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations within our Form 10-K.

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~~Fuel Price Risks~~

~~As of February 29, 2020, based on a 10% change in each of the fuel prices versus the spot price we estimate that our adjusted earnings per share would change by the following:~~

~~Heavy Fuel Oil (“HFO”) impact:~~

•~~$0.04 per share for the remaining three quarters of 2020~~

•~~$0.01 per share for the second quarter of 2020~~

~~Marine Gasoil (“MGO”) impact:~~

•~~$0.06 per share for the remaining three quarters of 2020~~

•~~$0.03 per share for the second quarter of 2020~~

~~Operational Currency Risks~~

~~As of February 29, 2020, based on a 10% change in all currency exchange rates, we estimate that our adjusted earnings per share would change by the following:~~

•~~$0.02 per share for the remaining three quarters of 2020~~

•~~$(0.07) per share for the second quarter of 2020~~

Interest Rate Risks

The composition of our debt, including the effect of ~~foreign currency swaps and~~ interest rate swaps, was as follows:


	February ~~29, 2020~~28, 2021
Fixed rate	2148	%
EUR fixed rate	3713	%
Floating rate	1020	%
EUR floating rate	2517	%
GBP floating rate	72	%

Item 4. Controls and Procedures.

A. Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, is recorded, processed, summarized and reported, within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in our reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

Our President and Chief Executive Officer and our Chief Financial Officer and Chief Accounting Officer have evaluated our disclosure controls and procedures and have concluded, as of February ~~29, 2020,~~28, 2021, that they are effective at a reasonable level of assurance, as described above.

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B. Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the quarter ended February ~~29, 2020~~28, 2021 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

~~As previously disclosed, on October 23, 2019,~~In addition to the proceeding described below, the legal proceedings described in Note 4 – “Contingencies and Commitments” of our consolidated financial statements, including those described under “COVID-19 Actions,” are incorporated in this “Legal Proceedings” section by reference. Additionally, SEC rules require disclosure of certain environmental matters when a ~~complaint was filed by~~governmental authority is a ~~purported shareholder of Carnival plc in~~party to the ~~New York Supreme Court, New York County, purporting to allege derivative claims on Carnival plc’s behalf~~proceedings and such proceedings involve potential monetary sanctions that we believe will exceed $1 million for breach of fiduciary duty and corporate waste against the members of the Carnival plc Board of Directors (the “Board”). On February 10, 2020, Carnival plc and the Board filed a joint motion to dismiss this complaint.such proceedings.

As previously disclosed, on May 19, 2017, Holland America Line and Princess Cruises notified the National Oceanic and Atmospheric Administration ~~(“NOAA”)~~ regarding discharges made by certain vessels in the recently expanded area of the National Marine Sanctuary in the Farallones Island. On February 7, ~~2020, Carnival Corporation received an assessment for~~2021, the parties reached a ~~civil penalty of $1.4 million for discharges. We believe the ultimate outcome of any penalty will not have a material impact on our consolidated financial statements.~~

~~In June and August of 2018,~~global settlement under which Holland America Line received four Notices of Violation from the Alaska Department of Environmental Conservation, alleging that four ships violated the Alaska state visible emissions standards while docked in Skagway, Haines and ~~Ketchikan. On October 17, 2018, Holland America Line received~~Princess Cruises will pay $0.8 million on an offer to settle the Notices of Violation and on February 13, 2020 it received a revised offer to settle. We deny the allegations under all four Notices of Violation and we believe we have meritorious defenses to the claims, and that any liability which may arise as a result of this action will not have a material impact on our consolidated financial statements.

~~Refer to our consolidated financial statements for further information on~~ ~~Legal Proceedings~~.incremental payment plan through January 2023.

Item 1A. Risk Factors.

The risk factors in this Form 10-Q below should be carefully considered, including the risk factors discussed in “Risk Factors” and other risks discussed in our Form 10-K. These risks could materially and adversely affect our results, operations, outlooks, plans, goals, growth, reputation, cash flows, liquidity, and stock price. Our business also could be affected by risks that we are not presently aware of or that we currently consider immaterial to our operations.

COVID-19 and Liquidity/Debt Related Risk Factors

The ~~spread of~~ COVID-19 ~~and the recent developments surrounding the~~ global pandemic ~~are~~is having material negative impacts on all aspects of our business. We ~~have~~ implemented a ~~voluntary~~ pause of our ~~global fleet~~guest cruise operations in mid-March 2020 across all brands. Although we began the resumption of limited guest cruise operations in September 2020 with cruises by Costa and in October 2020 with cruises by AIDA, as of February 28, 2021, none of our ships were operating with guests onboard. The pause with respect to these and other brands and ~~such pause~~ships may be prolonged. ~~As of March 31, 2020, substantially all our ships are at port and all are expected to dock by the end of April.~~ In addition, we have been, and will continue to be ~~further,~~ negatively impacted by related developments, including heightened governmental regulations, travel bans and travel advisories and restrictions and recommendations by the U.S. Department of State, ~~and~~ the Centers for Disease Control and Prevention (“CDC”) and ~~travel bans and restrictions, each of which has impacted, and is expected to continue to significantly impact, global guest sourcing and our access to various ports of call.~~other governmental authorities.

~~To date we have~~We incurred ~~and expect to continue to incur,~~ significant costs as we ~~bring currently ongoing cruises to a conclusion, provide~~paused our guest cruise operations, provided air transportation to return our passengers to their home destinations, repatriated shipboard team members and ~~assist~~assisted some of our crew that ~~is, or will be upon docking,~~were unable to return home with food and housing. We will continue to incur COVID-19 related costs as we ~~sanitize our ships and~~ implement additional hygiene-related ~~protocol~~protocols to our ~~ships.~~ships, as well as prepare for the continued resumption of guest cruise operations. In addition, the industry is subject to and may be further subject to enhanced health and hygiene requirements in attempts to counteract future outbreaks, ~~which~~and these requirements may be costly and take a significant amount of time to implement across our global ~~fleet~~cruise operations. In October 2020, the CDC announced a framework for a phased resumption of cruise ship passenger operations in U.S. waters that is currently uncertain and will require further evaluation as we seek to resume operations. Implementing these requirements may result in an increase in costs and take time before the resumption of our guest cruise operations.

Due to the outbreak of COVID-19 on some of our ships, and the resulting illness and loss of life in certain instances, we have been the subject of negative publicity, which could have a long term impact on the appeal of our brands, which would diminish demand for vacations on our vessels. We cannot predict how long the negative impact of ~~recent~~ media attention on our brands will last, or the level of investment that will be required to address the concerns of potential travelers through marketing and pricing actions.

We have received, and ~~expect to~~may continue to receive, lawsuits, ~~from passengers aboard the Grand Princess voyage in February 2020. We may receive additional lawsuits~~other governmental investigations and other actions stemming from COVID-19. We cannot predict the quantum or outcome of any such proceedings, some of which could result in the imposition of civil and criminal penalties in the future, and the impact that they will have on our financial results, but any such impact may be material. We also remain subject to extensive, complex, and closely monitored obligations under the court-ordered environmental compliance plan supervised by the U.S. District Court for the Southern District of Florida, as a result of the

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previously disclosed settlement agreement relating to the violation of probation conditions for a plea agreement entered into by Princess Cruises and the U.S.

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Department of Justice in 2016. We remain fully committed to satisfying those obligations. ~~However, COVID-19 presents enormous challenges for the Company, which could result in material adverse impacts.~~

We have insurance coverage for certain liabilities, costs and expenses related to COVID-19 through our participation in Protection and Indemnity (“P&I”) clubs, including coverage for direct and incremental costs including, but not limited to, certain quarantine expenses and for certain liabilities to passengers and crew. P&I clubs are mutual indemnity associations owned by members. There is a $10 million deductible per occurrence (meaning per outbreak on a particular ship). We cannot assure you that we will receive insurance proceeds that will compensate us fully for our liabilities, costs and expenses that exceed the $10 million deductible under these policies. We have no insurance coverage for loss of revenues or earnings from our ships or other operations.

In connection with our capacity optimization strategy, we have accelerated the removal of ships from our fleet which were previously expected to be sold over the ensuing years. We have sold, expect to sell or have agreements for the disposal of various vessels. Some of these agreements for the disposal of vessels are for recycling. When we choose to dispose of a ~~total of 16 cruise ships scheduled~~ship, there can be no assurance that there will be a viable buyer to ~~be delivered through 2025, including four during the remainder of fiscal 2020. We believe the~~purchase it at a price that exceeds our net book value, which could result in ship impairment charges and losses on ship disposals.

The effects of COVID-19 on the operations of shipyards where our ships are under construction will result in a delay in ship ~~deliveries, which we cannot predict and may be prolonged.~~deliveries.

We cannot predict ~~when any~~the timing of our ~~ships will begin~~complete return to ~~sail again~~service and when various ports will reopen to our ships. If we are delayed in recommencing guest cruise operations or there is a further pause in the resumption of limited guest cruise operations, it could further negatively impact our liquidity. As our business is seasonal, the impact of a delay or further pause in the resumption of guest cruise operations will be heightened if such delay or pause occurs during the Northern Hemisphere summer months. Moreover, even ~~once~~as travel advisories and restrictions are lifted, demand for cruises may remain weak for a significant length of time and we cannot predict if and when each brand will return to pre-outbreak demand or fare pricing. In particular, our bookings may be negatively impacted by the adverse changes in the perceived or actual economic climate, including higher unemployment rates, declines in income levels and loss of personal wealth resulting from the impact of COVID-19. In addition, we cannot predict the impact COVID-19 will have on our partners, such as travel agencies, suppliers and other ~~vendors.~~vendors, counterparties and joint ventures. We may be adversely impacted as a result of the adverse impact our partners, counterparties and joint ventures suffer.

We have never previously experienced a complete cessation of our ~~cruising~~guest cruise operations, and as a consequence, our ability to be predictive regarding the impact of such a cessation on our brands and future prospects is uncertain. In particular, we cannot predict the impact on our financial performance and ~~our~~ cash flows (including as required for cash refunds of ~~deposits~~deposits) as a result of the current pause in our ~~global fleet~~guest cruise operations, which may be prolonged, and the public’s concern regarding the health and safety of travel, especially by cruise ship, and related decreases in demand for travel and cruising. Moreover, our ability to attract and retain guests and our ability to hire and the amounts we must pay our crew depends, in part, upon the perception and reputation of our company and our brands and the public’s concerns regarding the health and safety of travel generally, as well as regarding the cruising industry and our ships specifically. As a result, we expect a net loss on both a U.S. GAAP and adjusted basis for the fiscal year ending November 30, 2020, and our ability to forecast our cash inflows and additional capital needs is hampered.

~~As a result of all of the foregoing, we may be required to raise additional capital and our~~Our access to and cost of financing ~~will depend~~depends on, among other things, global economic conditions, conditions in the global financing markets, the availability of sufficient amounts of financing, our prospects and our credit ratings. As a result of ~~COVID-19, in March and April 2020,~~COVID-19's effects on our operations, Moody's and S&P Global have downgraded our ~~long-term issuer and senior unsecured debt ratings. In addition, our long-term ratings were placed on review for further downgrade by both rating agencies. Our short-term commercial paper~~ credit ratings ~~were downgraded and also placed on review for~~to be non-investment grade. If we are delayed in recommencing guest cruise operations or there is a further ~~downgrade. If~~pause in the resumption of limited guest cruise operations, our credit ratings were to be further downgraded, or general market conditions were to ascribe higher risk to our rating levels, our industry, or us, our access to capital and the cost of any debt or equity financing will be further negatively impacted. In addition, the terms of future debt agreements could include more restrictive covenants, or require incremental collateral, which may further restrict our business operations or be unavailable due to our covenant restrictions then in effect. There is no guarantee that debt or equity financings will be available in the future to fund our obligations, or that they will be available on terms consistent with our expectations. Additionally, the impact of COVID-19 on the financial markets ~~is expected to~~may adversely impact our ability to raise ~~funds through equity financings.~~funds.

In addition, the COVID-19 outbreak has significantly increased economic and demand uncertainty. The current outbreak and continued spread of COVID-19 ~~could cause~~has caused a global recession, which ~~would~~could have a further adverse impact on our financial condition and operations. In past recessions, demand for our cruise vacations has been significantly negatively impacted which has resulted in lower occupancy rates and adverse pricing, with a corresponding increase in the use of credits and other means to attract travelers. ~~Current economic forecasts for significant~~Significant increases in unemployment in the U.S. and other regions due to the adoption of ~~social~~physical distancing and other policies to slow the spread of the virus ishave had, and are likely to continue to have, a negative impact on booking demand for our ~~global fleet~~guest cruise operations, ~~once our operations resume,~~ and these impacts could exist for an extensive period of time.

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The extent of the effects of the outbreak on our business and the cruising industry at large is highly uncertain and will ultimately depend on future developments, including, but not limited to, the duration and severity of the outbreak, the length of time it takes for demand and pricing to return and normal economic and operating conditions to resume. To the extent COVID-19 adversely affects our business, operations, financial condition and operating results, it may also have the effect of heightening many ~~of the~~ other ~~risks described in Item 1A. “Risk Factors” included in our Form 10-K.~~

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•~~Any potential government disaster relief assistance could impose significant limitations on our corporate activities and may not be on terms favorable to us~~.

If any government agrees to provide disaster relief assistance, it may impose certain requirements on the recipients of the aid including restrictions on executive officer compensation, share buybacks, dividends, prepayment of debt and other similar restrictions until the aid is repaid or redeemed in full. We cannot assure you that any such government disaster relief assistance, if passed, will not significantly limit our corporate activities or be on terms that are favorable to us or at all. Such restrictions and terms could adversely impact our business and operations.

•~~Any failure to protect our intellectual property rights could impair our brands, negatively impact our business or both~~.

Our success and ability to compete depend in part on protecting our brands and other intellectual property, including our ability to use trademarks in order to capitalize on name-recognition and increase awareness of our brands. We rely on a combination of trademark, patent, copyright, trade secrets and other rights, as well as confidentiality procedures and contractual provisions to protect our intellectual property and proprietary technology. The steps we take to protect our intellectual property rights, however, may not be adequate. For example, not all of the trademarks that are used in our business have been registered in all countries in which we do business or may do business in the future, and some of the trademarks may never be registered in all of these countries. Rights in trademarks are generally national in character, and are obtained on a country-by-country basis by the first person to obtain protection through use or registration in that country in connection with specified products and services. Some countries’ laws do not protect unregistered trademarks at all, or make them more difficult to enforce, and third parties may have filed for trademarks that are the same or similar to our brands in countries where we have not registered our brands as trademarks. Accordingly, we may not be able to adequately protect our brands everywhere we do business and use of our brands may result in liability for trademark infringement, trademark dilution or unfair competition. In addition, the laws of some foreign countries do not protect intellectual property to the same extent as the laws of the United States, and we may not receive registrations for all of our pending trademark, patent or copyright applications, and existing or future registrations may not provide sufficient protection or competitive advantages for our products and services. In the event that we are not able to obtain grants or registrations in respect of such intellectual property applications, we may not be able to obtain statutory protections available under the relevant intellectual property laws, which could limit our ability to protect our intellectual property and impede our marketing efforts. In addition, we cannot be certain that our products and technology do not and will not infringe the intellectual property rights of others, and third parties may seek to challenge, invalidate or circumvent our trademark, patent, copyright, trade secrets and other rights or applications for any of the foregoing. Furthermore, it is difficult for us to monitor unauthorized uses of our intellectual property, and if we become aware of a third party’s unauthorized use or misappropriation of our intellectual property, it may not be practicable, effective or cost-efficient for us to enforce our intellectual property and contractual rights fully. In order to protect or enforce our intellectual property rights, we may be required to spend significant resources. Regardless of the merits of any such claim as a plaintiff or defendant, litigation could be costly, time consuming, distracting and we may not prevail, which could result in the impairment or loss of intellectual property rights. To the extent claims against us are successful, we may have to pay substantial monetary damages (including treble damages), or discontinue or modify certain products or services that are found to be in violation of another party’s rights. We may have to seek a license to continue offering our products or technology, which may not be available on reasonable terms, or at all. Our failure to secure, protect and enforce our intellectual property rights could materially adversely affect our business.

•~~We are subject to casualty risks that could materially adversely affect our business~~.

~~We use a combination of insurance and self-insurance to cover a number of risks associated with owning and operating our vessels and other non-ship related~~ risks. There are, however, certain losses, including losses resulting from terrorist acts and certain environmental disasters, that may be either uninsurable or not economically insurable, in whole or in part. As a result, we cannot assure you that the insurance proceeds will compensate us fully for our losses. If we suffer a total or partial loss, we cannot assure you that any insurance proceeds received by us will be sufficient to satisfy all of our obligations. Moreover, we do not carry coverage related to loss of earnings or revenues from our ships or other operations. In the event of a total or partial loss to any of our vessels, such vessels and certain items of equipment inventory may not be easily replaced. Accordingly, even though there may be insurance coverage, the extended period needed to replace such vessels or items could cause significant ~~losses.~~

•~~Our substantial debt could adversely affect our financial health and operating flexibility~~.

We have a substantial amount of debt and significant debt service obligations. As of February 29, 2020, on an as-adjusted basis after giving effect to the draw on our Existing Multicurrency Facility and the Secured Notes and Convertible Notes offerings, we would have had total gross debt of $21,841 million.

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~~Our substantial debt could:~~

◦~~require us to dedicate a large portion of our cash flow from operations to service debt and fund repayments~~

~~on our debt, thereby reducing the availability of our cash flow to fund working capital, capital expenditures~~

~~and other general corporate purposes;~~

◦~~increase our vulnerability to adverse general economic or industry conditions;~~

◦~~limit our flexibility in planning for, or reacting to, changes in our business or the industry in which we operate;~~

◦~~place us at a competitive disadvantage compared to our competitors that have less debt;~~

◦~~make us more vulnerable to downturns in our business, the economy or the industry in which we operate;~~

◦~~limit our ability to raise additional debt or equity capital in the future to satisfy our requirements relating to~~

~~working capital, capital expenditures, development projects, strategic initiatives or other purposes;~~

◦~~restrict us from making strategic acquisitions, introducing new technologies or exploiting business~~

~~opportunities;~~

◦~~make it difficult for us to satisfy our obligations with respect to our debt; and~~

◦~~expose us to the risk of increased interest rates as certain of our borrowings are (and may be in the future) at~~

~~a variable rate of interest.~~

•~~Despite our leverage, we may incur more debt, which could adversely affect our business and prevent us from~~

~~fulfilling our obligations with respect to our debt.~~

We may be able to incur substantial additional debt in the future. Although the instruments governing our existing indebtedness contain restrictions on the incurrence of additional debt, these restrictions are subject to a number of significant qualifications and exceptions, and under certain circumstances, the amount of debt that could be incurred in compliance with these restrictions could be substantial and a portion of such debt could be secured. If new debt is added to our existing debt levels, our business could be adversely affected which may prevent us from fulfilling our obligations with respect to our debt.

•We are subject to restrictive debt covenants that may limit our ability to finance future operations and capital needs and to pursue business opportunities and activities. In addition, if we fail to comply with any of these restrictions, it could have a material adverse effect on the Company.

Our Existing Multicurrency Facility, the indenture governing the Secured Notes and certain of our other debt instruments limit our flexibility in operating our business. For example, the indenture governing the Secured Notes will restrict or limit the ability of Carnival Corporation, Carnival plc and certain of their respective subsidiaries to, among other things:

◦~~incur or guarantee additional indebtedness;~~

◦~~pay dividends or distributions on, or redeem or repurchase capital stock and make other restricted payments;~~

◦~~make investments;~~

◦~~consummate certain asset sales;~~

◦~~engage in certain transactions with affiliates;~~

◦~~grant or assume certain liens; and~~

◦~~consolidate, merge or transfer all or substantially all of our assets.~~

All of these limitations will be subject to significant exceptions and qualifications. Despite these exceptions and qualifications, we cannot assure you that the operating and financial restrictions and covenants in our Existing Multicurrency Facility, the indenture governing the Secured Notes and certain of our other debt instruments will not adversely affect our ability to finance our future operations or capital needs or engage in other business activities that may be in our interest. Any future indebtedness may include similar or other restrictive terms. In addition, our ability to comply with these covenants, including financial covenants relating to our consolidated net interest, and restrictions may be affected by events beyond our control. These include prevailing economic, financial and industry conditions. If we breach any of these covenants or restrictions, we could be in default under the terms of our Existing Multicurrency Facility and certain of our other debt facilities and the relevant lenders could elect to declare the debt, together with accrued and unpaid interest and other fees, if any, immediately due and payable and proceed against any collateral securing that debt. Such a breach could also result in an event of default under the indenture governing the Secured Notes. If the debt under the Existing Multicurrency Facility, the guarantees or certain of our other debt instruments that we enter into were to be accelerated, our assets may be insufficient to repay in full our debt. Borrowings under other debt instruments that contain cross-default provisions also may be accelerated or become payable on demand. In these circumstances, our assets may not be sufficient to repay in full our indebtedness then outstanding.

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•We will require a significant amount of cash to service our debt and sustain our operations. Our ability to generate cash depends on many factors beyond our control, and we may not be able to generate cash required to service our debt.

Our ability to meet our other debt service obligations or refinance our debt depends on our future operating and financial performance and ability to generate cash. This will be affected by our ability to successfully implement our business strategy, as well as general economic, financial, competitive, regulatory and other factors beyond our control, such as the disruption caused by the COVID-19 pandemic. If we cannot generate sufficient cash to meet our debt service obligations or fund our other business needs, we may, among other things, need to refinance all or a portion of our debt, obtain additional financing, delay planned capital expenditures or sell assets. We cannot assure you that we will be able to generate sufficient cash through any of

the foregoing. If we are not able to refinance any of our debt, obtain additional financing or sell assets on commercially reasonable terms or at all, we may not be able to satisfy our obligations with respect to our debt. See “Recent Developments”, “Management’s discussion and analysis of financial condition and results of operations—Liquidity and capital resources” in our Annual Report and “Update on Liquidity and Management’s Plans” in our current report on Form 8-K as filed on March 31, 2020.

•~~Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly~~.

Borrowings under the Existing Multicurrency Facility and certain of our other facilities are at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on certain of our variable rate indebtedness will increase even though the amount borrowed remains the same, and our net income and cash flows, including cash available for servicing our indebtedness, will correspondingly decrease. In addition, in July 2017, the U.K. Financial Conduct Authority announced that it intends to stop collecting LIBOR rates from banks after 2021. The announcement indicates that LIBOR will not continue to exist on the current basis. We are unable to predict the effect of any changes to LIBOR, the establishment and success of any alternative reference rates, or any other reforms to LIBOR or any replacement of LIBOR that may be enacted in the United Kingdom or elsewhere. Such changes, reforms or replacements relating to LIBOR could have an adverse impact on the market for or value of any LIBOR-linked securities, loans, derivatives or other financial instruments or extensions of credit held by us. As such, LIBOR-related changes could affect our overall results of operations and financial condition.

We have entered into, and in the future we will continue to enter into, interest rate swaps that involve the exchange of floating for fixed-rate interest payments to reduce interest rate volatility. However, we may not maintain interest rate swaps with respect to all of our variable rate indebtedness, and any such swaps may not fully mitigate our interest rate risk, may prove disadvantageous, or may create additional risks. Each 0.125% change in interest rates would result in approximately $9 million change in annual interest expense on our variable interest debt instruments that were outstanding as of November 30, 2019, including the impact of our interest rate swaps, and the Existing Multicurrency Facility.

Under the terms of certain of our ~~debt~~export credit facilities, ~~with an aggregate outstanding principal amount of $8.4 billion of indebtedness as of February 29, 2020,~~ we are required to ~~maintain an interest coverage ratio (EBITDA to consolidated net interest charges for~~comply with the ~~most recently ended four fiscal quarters)~~Interest Coverage Covenant of not less than 3.0 to 1.0, and ensure that our Debt to Capital Covenant does not exceed 65% at the end of each fiscal quarter. As ~~a result~~ of February 28, 2021 (and while being in compliance with the ~~COVID-19 outbreak,~~Debt to Capital Covenant as of such date), we ~~have paused~~obtained waivers of compliance with the Interest Coverage Covenant and Debt to Capital Covenant in our ~~global fleet cruise operations~~export credit facilities through August 31, 2022 (with the next testing date of November 30, 2022) or November 30, 2022 (with the next testing date of February 28, 2023) for our funded export credit facilities with aggregate indebtedness of $8.9 billion as of February 28, 2021 and ifunfunded export credit facilities with an aggregate principal amount of $6.5 billion as of February 28, 2021.

During the first quarter of 2021 we entered into supplemental agreements with respect to our Revolving Credit Facility and many of our bank loans. Under our Revolving Credit Facility and many of our bank loans, we are ~~unable~~now required to ~~re-commence normal operations in~~maintain the ~~near-term,~~Interest Coverage Covenant from February 28, 2023, at a ratio of not less than 2.0 to 1.0 for the February 28, 2023 and May 31, 2023 testing dates, 2.5 to 1.0 for the August 31, 2023 and November 30, 2023 testing dates, and 3.0 to 1.0 from the February 28, 2024 testing date onwards, or through their respective maturity dates, and the Debt to Capital Covenant at the end of each fiscal quarter before the November 30, 2021 testing date at a percentage not to exceed 65%. From the November 30, 2021 testing date until the May 31, 2023 testing date the Debt to Capital Covenant is not to exceed 75%, following which it will be tested at levels which decline ratably to 65% from the May 31, 2024 testing date onwards.

Even though we expect to obtain further amendments under our debt facilities with respect to the Interest Coverage Covenant or the Debt to Capital Covenant, if such amendments are not obtained we may be ~~out~~required to take certain actions, which in the case of the Debt to Capital Covenant could include issuing additional equity and/or reducing our indebtedness, failing which we may not be in compliance with ~~our interest coverage ratio covenant~~the Interest Coverage Covenant or the Debt to Capital Covenant following August 31, 2022 with the next testing date of November 30, 2022 for such debt facilities, or as of future testing dates for certain agreements, because of the ~~end~~pause and limited resumptions of our ~~third fiscal quarter or in future periods. If we expected to be out of compliance, we expect to seek waivers from the lenders under these numerous facilities prior to any covenant violation.~~guest cruise operations.

~~Any covenant waiver~~Amendments and waivers of the Interest Coverage Covenant and Debt to Capital Covenant have led and may continue to lead to increased costs, increased interest rates, additional restrictive covenants and other ~~available~~ lender protections that ~~would be~~are, or may become, applicable to us under these debt facilities, and such increased costs, restrictions and modifications may vary among debt facilities. For example, in connection with the amendments to the Revolving Credit Facility and certain agreements governing our bank loans described above, we have made certain changes to more closely align the financial covenants among the various facilities and agreements. In addition, we have agreed to additional restrictive covenants in such facilities and agreements with respect to debt incurrence, lien incurrence, restricted payments and investments that are substantially consistent with those contained in the indentures governing our recent unsecured notes issuances. Our ability to provide additional lender protections under these facilities, including the granting of security interests in certain collateral and the granting of guarantees with respect to certain outstanding debt, will be limited by the ~~restrictions in~~terms of such agreements as amended, and our ~~indebtedness.~~ other debt facilities.

There can be no assurance that we ~~would~~will be able to obtain ~~waivers~~amendments in a timely manner, on acceptable terms or at all. If we were not able to obtain athe financial covenant ~~waiver~~amendments described above under any one or more of these debt facilities, we would be in default of any such ~~agreements, which could result in cross defaults to our other debt agreements.~~agreement. As a consequence, we would need to refinance or repay the applicable debt facility or facilities, and would be required to raise additional debt or equity capital, or divest assets, to refinance or repay such facility or facilities. If we were to be unable to obtain afinancial covenant ~~waiver~~amendments as may be required under any one or more of these debt

~~Table of Contents~~

facilities, there can be no assurance that we would be able to raise sufficient debt or equity capital, or divest assets, to refinance or repay such facility or facilities.

With respect to each of ~~these~~the unfunded debt facilities, if we were ~~not~~unable to obtain ~~a waiver~~amendments under such debt facilities, the relevant lender under such facility could terminate that facility. With respect to each of our funded debt facilities, if we were unable to obtain amendments or refinance or repay such debt facilities, it would lead to an event of default under such facilities, which could lead to an acceleration of the indebtedness under such debt facilities. In turn, this would lead to an event of default and potential acceleration of amounts due under all of our outstanding debt and derivative contract payables. As a result, the failure to obtain the financial covenant ~~waivers~~amendments described above would have a material adverse effect.

Additional risk factors that affect our business and financial results are discussed in “Item 1A. Risk Factors,” included in the Form 10-K. We wish to caution the reader that the risk factors discussed in “Item 1A. Risk Factors,” included in the Form 10-K, and those described elsewhere in this report or other Securities and Exchange Commission filings, could cause future results to differ materially from those stated in any forward-looking statements. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.

~~Item 2.~~ ~~Unregistered Sales of Equity Securities and Use of Proceeds~~.

A. ~~Repurchase Program~~

Under a share repurchase program effective 2004, we are authorized to repurchase Carnival Corporation common stock and Carnival plc ordinary shares (the “Repurchase Program”). Effective August 2018, the company approved a modification of the general authorization under the Repurchase Program, which replenished the remaining authorized repurchases at the time of the approval to $1.0 billion. The Repurchase Program does not have an expiration date and may be discontinued by our Boards of Directors at any time. Subsequent to quarter end, to enhance our liquidity as well as comply with restrictions anticipated in future financing transactions, we have suspended share repurchases.

~~During the three months ended February 29, 2020, no shares of Carnival Corporation common stock were repurchased pursuant to the Repurchase Program.~~

~~During the three months ended February 29, 2020, repurchases of Carnival plc ordinary shares pursuant to the Repurchase Program were as follows:~~

Period Total Number of Shares of Carnival plc Purchased (in millions) Average Price Paid per Share of Carnival plc Maximum Dollar Value of Shares That May Yet Be Purchased Under the Repurchase Program
(in millions)
December 1, 2019 through December 31, 2019 0.2 $ 41.29 $ 122
January 1, 2020 through January 31, 2020 — $ — $ 122
February 1, 2020 through February 29, 2020 — $ — $ 122
Total 0.2 $ 41.29

~~No shares of Carnival Corporation common stock and Carnival plc ordinary shares were purchased outside of publicly announced plans or programs.~~

B. ~~Carnival plc Shareholder Approvals~~

Carnival plc ordinary share repurchases under the Repurchase Program require annual shareholder approval. The existing shareholder approval is limited to a maximum of 19.2 million ordinary shares and is valid until the earlier of the conclusion of the Carnival plc 2020 annual general meeting or July 15, 2020. Subsequent to quarter end, to enhance our liquidity as well as comply with restrictions anticipated in future financing transactions, we have suspended share repurchases.

Table of ~~Contents~~C ontents

Item 6. Exhibits.

INDEX TO EXHIBITS
Incorporated by Reference Filed/
Furnished
Herewith
Exhibit
Number
Exhibit Description Form Exhibit Filing
Date
Articles of incorporation and by-laws
3.1
Third Amended and Restated Articles of Incorporation of Carnival Corporation
   8-K 3.1 4/17/2003
3.2
Third Amended and Restated By-Laws of Carnival Corporation
   8-K 3.1 4/20/2009
3.3
Articles of Association of Carnival plc
   8-K 3.3 4/20/2009
Material Contracts
10.1
Form of Management Incentive Tied Restricted Stock Unit Agreement for the Carnival Corporation 2011 Stock Plan
X
10.2
Form of Management Incentive Tied Restricted Share Unit Agreement for the Carnival plc 2014 Employee Share Plan
X
10.3
Form of Shareholder Equity Alignment Restricted Stock Unit Agreement for the Carnival Corporation 2011 Stock Plan
X
Rule 13a-14(a)/15d-14(a) certifications
31.1
Certification of President and 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
31.2
Certification of Chief Financial Officer and Chief Accounting 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 President and 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
31.4
Certification of Chief Financial Officer and Chief Accounting 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 President and 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 Financial Officer and Chief 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
X
32.3*
Certification of President and 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
32.4*
Certification of Chief Financial Officer and Chief 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
X

INDEX TO EXHIBITS

Incorporated by Reference

Filed/
Furnished
Herewith

Exhibit
Number

Exhibit Description

Form

Exhibit

Filing
Date

Articles of incorporation and by-laws

3.1

Third Amended and Restated Articles of Incorporation of Carnival Corporation

8-K

3.1

4/17/2003

3.2

Third Amended and Restated By-Laws of Carnival Corporation

8-K

3.1

4/20/2009

3.3

Articles of Association of Carnival plc

8-K

3.3

4/20/2009

Material Contracts

10.1

Indenture dated as of February 16, 2021 among Carnival Corporation as issuer, Carnival plc, the other Guarantors party thereto and U.S. Bank, National Association, as trustee, principal paying agent, transfer agent and registrar, relating to the 5.75% Senior Unsecured Notes due 2027

10.2

Form of Executive Time-Based Restricted Share Unit Agreement for the Carnival plc 2014 Employee Share Plan

10.3

Form of Executive Time-Based Restricted Stock Unit Agreement for the Carnival Corporation 2020 Stock Plan

Rule 13a-14(a)/15d-14(a) certifications

31.1

Certification of President and 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 Financial Officer and Chief Accounting Officer of Carnival Corporation pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.3

Certification of President and 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

31.4

Certification of Chief Financial Officer and Chief Accounting Officer of Carnival plc pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

4534

Table of ~~Contents~~C ontents

INDEX TO EXHIBITS

Incorporated by Reference

Filed/
Furnished
Herewith

Exhibit

Number

Exhibit Description

Form

Exhibit

Filing
Date

Section 1350 certifications

32.1*

Certification of President and 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 Financial Officer and Chief 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

32.3*

Certification of President and 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

32.4*

Certification of Chief Financial Officer and Chief 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

Interactive Data File

101

The consolidated financial statements from Carnival Corporation & plc’s joint Quarterly Report on Form 10-Q for the quarter ended February ~~29, 2020,~~28, 2021, as filed with the Securities and Exchange Commission on April ~~3, 2020,~~7, 2021, formatted in Inline XBRL, are as follows:

(i) the Consolidated Statements of Income (Loss) for the three months ended February ~~29/28, 2020~~28/29, 2021 and ~~2019;~~2020;

(ii) the Consolidated Statements of Comprehensive Income (Loss) for the three months ended February ~~29/28, 2020~~28/29, 2021 and ~~2019;~~2020;

(iii) the Consolidated Balance Sheets at February ~~29, 2020~~28, 2021 and November 30, ~~2019;~~2020;

(iv) the Consolidated Statements of Cash Flows for the three months ended February ~~29/28, 2020~~28/29, 2021 and ~~2019;~~2020;

(v) the Consolidated Statements of Shareholders’ Equity for the three months ended February ~~29/28, 2020~~28/29, 2021 and ~~2019;~~2020;

(vi) the notes to the consolidated financial statements, tagged in summary and detail.

104

The cover page from Carnival Corporation & plc’s joint Quarterly Report on Form 10-Q for the quarter ended February ~~29, 2020,~~28, 2021, as filed with the Securities and Exchange Commission on April ~~3, 2020,~~7, 2021, formatted in Inline XBRL (included as Exhibit 101)



*			These items are furnished and not filed.
**			Certain portions of this exhibit have been omitted pursuant to Item 601(b)(10) of Regulation S-K.

Table of ~~Contents~~C ontents

SIGNATURES

Pursuant to the requirements 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

By:

/s/ Arnold W. Donald

By:

/s/ Arnold W. Donald

Arnold W. Donald

President and Chief Executive Officer

By:

/s/ David Bernstein

By:

/s/ David Bernstein

David Bernstein

Chief Financial Officer and Chief Accounting Officer

Date: April ~~3, 2020~~7, 2021

4736


	Entered Into	Matures In	Weighted-Average Floor Rate		Weighted- Average Ceiling Rate		Weighted-Average Forward Rate
Foreign currency zero cost collars
Enchanted Princess	2019	June 2020	$	1.04	$	1.28
Mardi Gras	2019	October 2020	$	1.05	$	1.28
Foreign currency forwards
Iona	2020	May 2020					£	0.85


(in millions) Year	Total Operating Leases
Remainder of 2020	$	158
2021	188
2022	156
2023	148
2024	142
Thereafter	1,039
Total lease payments	1,832
Less: Present value discount	(352)
Present value of lease liabilities	$	1,480


	Three Months Ended February 29/28,
(in millions)	Revenues		Operating costs and expenses		Selling and administrative		Depreciation and amortization		Operating income (loss)
2020
NAA	$	3,140	$	2,274	$	400	$	364	$	(197)	(a)
EA	1,552		1,317		207		166		(569)		(b)
Cruise Support	44		(87)		65		32		35
Tour and Other	52		19		7		8		18
	$	4,789	$	3,523	$	678	$	570	$	(713)
2019
NAA	$	3,077	$	2,010	$	353	$	328	$	386
EA	1,526		1,075		205		152		93
Cruise Support	42		27		65		28		(78)
Tour and Other	29		29		6		9		(15)
	$	4,673	$	3,142	$	629	$	516	$	386


	Three Months Ended February 29/28
(in millions)	2020		2019
North America	$	2,647	$	2,520
Europe	1,367		1,399
Australia and Asia	615		584
Other	161		170
	$	4,789	$	4,673


	Three Months Ended February 29/28,
(dollars in millions, except yields)	2020			2020 Constant Currency			2019
Passenger ticket revenues	$	3,234					$	3,199
Onboard and other revenues	1,556						1,474
Less: Tour and other revenues	(52)						(29)
Gross cruise revenues	4,737						4,645
Less cruise costs
Commissions, transportation and other	(766)						(709)
Onboard and other	(471)						(467)
	(1,238)						(1,177)
Net cruise revenues	$	3,499		$	3,537		$	3,468

Net passenger ticket revenues	$	2,467		$	2,497		$	2,490
Net onboard and other revenues	$	1,032		$	1,039		$	978

ALBDs	21,977,115			21,977,115			21,299,196

Gross revenue yields	$	215.53					$	218.06
% increase (decrease)	(1.2)		%
Net revenue yields	$	159.22		$	160.93		$	162.82
% increase (decrease)	(2.2)		%	(1.2)		%
Net passenger ticket revenue yields	$	112.26		$	113.64		$	116.90
% increase (decrease)	(4.0)		%	(2.8)		%
Net onboard and other revenue yields	$	46.96		$	47.30		$	45.92
% increase (decrease)	2.3		%	3.0		%


	Three Months Ended February 29/28,
(dollars in millions, except costs per ALBD)	2020			2020 Constant Currency			2019
Operating expenses	$	3,523					$	3,142
Selling and administrative expenses	678						629
Less tour and other expenses	(26)						(34)
Gross cruise costs	4,175						3,736
Less cruise costs
Commissions, transportation and other	(766)						(709)
Onboard and other	(471)						(467)
Gains (losses) on ship sales and impairments	(221)						(2)
Restructuring expenses	—						—
Other	—						—
Net cruise costs	2,716						2,558
Less fuel	(396)						(381)
Net cruise costs excluding fuel	$	2,320		$	2,340		$	2,177

ALBDs	21,977,115			21,977,115			21,299,196

Gross cruise costs per ALBD	$	189.96					$	175.40
% increase (decrease)	8.3		%
Net cruise costs excluding fuel per ALBD	$	105.57		$	106.46		$	102.21
% increase (decrease)	3.3		%	4.2		%


	Three Months Ended
	February 29/28,
(in millions, except per share data)	2020		2019
Net income (loss)
U.S. GAAP net income (loss)	$	(781)	$	336
(Gains) losses on ship sales and impairments	928		2
Restructuring expenses	—		—
Other	3		—
Adjusted net income	$	150	$	338
Weighted-average shares outstanding	684		695

Earnings per share
U.S. GAAP diluted earnings per share	$	(1.14)	$	0.48
(Gains) losses on ship sales and impairments	1.36		—
Restructuring expenses	—		—
Other	0.01		—
Adjusted earnings per share	$	0.22	$	0.49


Period	Total Number of Shares of Carnival plc Purchased (in millions)	Average Price Paid per Share of Carnival plc		Maximum Dollar Value of Shares That May Yet Be Purchased Under the Repurchase Program (in millions)
December 1, 2019 through December 31, 2019	0.2	$	41.29	$	122
January 1, 2020 through January 31, 2020	—	$	—	$	122
February 1, 2020 through February 29, 2020	—	$	—	$	122
Total	0.2	$	41.29