Carnival 10-Q 2022-08-31

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 August 31, 2022

OR

☐			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)									(Exact name of registrant as specified in its charter)
Republic of Panama									England and Wales
(State or other jurisdiction of incorporation or organization)									(State or other jurisdiction of incorporation or organization)
59-1562976									98-0357772
(I.R.S. Employer Identification No.)									(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)									(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.
1.875% 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 September 22, 2022, Carnival Corporation had outstanding 1,112,706,805 shares of Common Stock, $0.01 par value.						At September 22, 2022, Carnival plc had outstanding 186,110,516 Ordinary Shares $1.66 par value, one Special Voting Share, GBP 1.00 par value and 1,112,706,805 Trust Shares of beneficial interest in the P&O Princess Special Voting Trust.

CARNIVAL CORPORATION & PLC

TABLE OF CONTENTS

									Page
PART I - FINANCIAL INFORMATION
Item 1.			Financial Statements						4
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations						26
Item 3.			Quantitative and Qualitative Disclosures About Market Risk						34
Item 4.			Controls and Procedures						34
PART II - OTHER INFORMATION
Item 1.			Legal Proceedings						35
Item 1A.			Risk Factors						35
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds						35
Item 6.			Exhibits						37
SIGNATURES									39

PART I - FINANCIAL INFORMATION

CARNIVAL CORPORATION & PLC

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(UNAUDITED)

(in millions, except per share data)

			Three Months Ended August 31,												Nine Months Ended August 31,
			2022						2021						2022						2021
Revenues
Passenger ticket			$	2,595					$	303					$	4,753					$	326
Onboard and other			1,711						243						3,577						295
			4,305						546						8,329						621
Operating Costs and Expenses
Commissions, transportation and other			565						79						1,141						116
Onboard and other			537						72						1,060						94
Payroll and related			563						375						1,601						834
Fuel			668						182						1,577						398
Food			259						52						586						80
Ship and other impairments			—						475						8						524
Other operating			787						381						2,118						786
			3,379						1,616						8,092						2,832
Selling and administrative			625						425						1,774						1,305
Depreciation and amortization			581						562						1,707						1,681
			4,585						2,603						11,573						5,817
Operating Income (Loss)			(279)						(2,057)						(3,244)						(5,196)
Nonoperating Income (Expense)
Interest income			24						3						34						10
Interest expense, net of capitalized interest			(422)						(418)						(1,161)						(1,253)
Gain (loss) on debt extinguishment, net			—						(376)						—						(372)
Other income (expense), net			(81)						(11)						(108)						(87)
			(479)						(802)						(1,235)						(1,702)
Income (Loss) Before Income Taxes			(759)						(2,859)						(4,478)						(6,898)
Income Tax Benefit (Expense), Net			(11)						23						(17)						17
Net Income (Loss)			$	(770)					$	(2,836)					$	(4,495)					$	(6,881)
Earnings Per Share
Basic			$	(0.65)					$	(2.50)					$	(3.89)					$	(6.14)
Diluted			$	(0.65)					$	(2.50)					$	(3.89)					$	(6.14)

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

CARNIVAL CORPORATION & PLC

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

(in millions)

			Three Months Ended August 31,												Nine Months Ended August 31,
			2022						2021						2022						2021
Net Income (Loss)			$	(770)					$	(2,836)					$	(4,495)					$	(6,881)
Items Included in Other Comprehensive Income (Loss)
Change in foreign currency translation adjustment			(283)						(224)						(529)						79
Other			1						1						6						8
Other Comprehensive Income (Loss)			(282)						(223)						(523)						87
Total Comprehensive Income (Loss)			$	(1,052)					$	(3,059)					$	(5,018)					$	(6,794)

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

CARNIVAL CORPORATION & PLC

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in millions, except par values)

			August 31, 2022						November 30, 2021
ASSETS
Current Assets
Cash and cash equivalents			$	7,071					$	8,939
Short-term investments			—						200
Trade and other receivables, net			360						246
Inventories			420						356
Prepaid expenses and other			581						392
Total current assets			8,432						10,133
Property and Equipment, Net			38,137						38,107
Operating Lease Right-of-Use Assets			1,163						1,333
Goodwill			579						579
Other Intangibles			1,151						1,181
Other Assets			2,455						2,011
			$	51,917					$	53,344
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Short-term borrowings			$	2,675					$	2,790
Current portion of long-term debt			2,877						1,927
Current portion of operating lease liabilities			139						142
Accounts payable			920						797
Accrued liabilities and other			1,873						1,641
Customer deposits			4,470						3,112
Total current liabilities			12,954						10,408
Long-Term Debt			28,518						28,509
Long-Term Operating Lease Liabilities			1,076						1,239
Other Long-Term Liabilities			989						1,043
Contingencies and Commitments
Shareholders’ Equity
Common stock of Carnival Corporation, $0.01 par value; 1,960 shares authorized; 1,243 shares at 2022 and 1,116 shares at 2021 issued			12						11
Ordinary shares of Carnival plc, $1.66 par value; 217 shares at 2022 and 2021 issued			361						361
Additional paid-in capital			16,626						15,292
Retained earnings

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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, as amended. 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,” “aspiration,” “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:

•Pricing			•Goodwill, ship and trademark fair values
•Booking levels			•Liquidity and credit ratings
•Occupancy			•Adjusted earnings per share
•Interest, tax and fuel expenses			•Return to guest cruise operations
•Currency exchange rates			•Impact of the COVID-19 coronavirus global pandemic on our financial condition and results of operations
•Estimates of ship depreciable lives and residual values

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 statements and adversely affect our business, results of operations and financial position. Additionally, many of these risks and uncertainties are currently, and in the future may continue to be, amplified by COVID-19. 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. The current, and uncertain future, impact of COVID-19, 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, reputation, litigation, cash flows, liquidity, and stock price.

• Events and conditions around the world, including war and other military actions, such as the current invasion of Ukraine, inflation, higher fuel prices, higher interest rates and other general concerns impacting the ability or desire of people to travel, have led, and may in the future lead, to a decline in demand for cruises, impacting our operating costs and profitability.

• Incidents concerning our ships, guests or the cruise industry have in the past and may, in the future, impact the satisfaction of our guests and crew and lead to reputational 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.

• Factors associated with climate change, including evolving and increasing regulations, increasing global concern about climate change and the shift in climate conscious consumerism and stakeholder scrutiny, and increasing frequency and/or severity of adverse weather conditions could adversely affect our business.

• Inability to meet or achieve our sustainability related goals, aspirations, initiatives, and our public statements and disclosures regarding them, may expose us to risks that may adversely impact our business.

• 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 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.

• The loss of key employees, our inability to recruit or retain qualified shoreside and shipboard employees and increased labor costs could have an adverse effect on our business and results of operations.

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

• We rely on supply chain vendors who are integral to the operations of our businesses. These vendors and service providers are also affected by COVID-19 and may be unable to deliver on their commitments which could impact our business.

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

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

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. Forward-looking and other statements in this document may also address our sustainability progress, plans and goals (including climate change and environmental-related matters). In addition, historical, current and forward-looking sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future.

New Accounting Pronouncements

Refer to Note 1 - “General, Accounting Pronouncements” of the consolidated financial statements for 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.

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. 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 typically earned during this period. This historical trend was disrupted in 2020 by the pause and in 2021 by the ongoing resumption of guest 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.

Known Trends and Uncertainties

• We believe the increased cost of fuel, liquefied natural gas and other related costs are reasonably likely to continue to impact our profitability in both the short and long-term.

• We expect inflation, higher interest rates and supply chain challenges to continue to weigh on our costs, and they are reasonably likely to continue to impact our profitability.

• We believe the increasing global focus on climate change, including the reduction of carbon emissions and new and evolving regulatory requirements, is reasonably likely to materially impact our future costs, capital expenditures and revenues and/or the relationship between them. The full impact of climate change to our business is not yet known.

• In addition, we are experiencing some challenges with onboard staffing which have resulted in occupancy constraints on certain voyages and are reasonably likely to impact our profitability in the short-term.

• We expect a net loss for the fourth quarter of 2022 and continue to expect a net loss for the full year 2022.

Statistical Information

			Three Months Ended August 31,												Nine Months Ended August 31,
			2022						2021						2022						2021
Passenger Cruise Days (“PCDs”) (in thousands) (a)			17,700						2,053						36,363						2,219
Available Lower Berth Days (“ALBDs”) (in thousands) (b)			21,015						3,788						51,004						4,405
Occupancy percentage (c)			84		%				54		%				71		%				50		%
Passengers carried (in thousands)			2,571						340						5,233						372
Fuel consumption in metric tons (in thousands)			701						344						1,899						852
Fuel consumption in metric tons per thousand ALBDs			33						(d)						37						(d)
Fuel cost per metric ton consumed			$	958					$	537					$	836					$	472
Currencies (USD to 1)
AUD			$	0.70					$	0.75					$	0.71					$	0.76
CAD			$	0.78					$	0.80					$	0.78					$	0.80
EUR			$	1.03					$	1.19					$	1.08					$	1.20
GBP			$	1.21					$	1.39					$	1.28					$	1.38

The resumption of guest cruise operations has impacted the comparability of all aspects of our business.

Notes to Statistical Information

(a)PCD represents the number of cruise passengers on a voyage multiplied by the number of revenue-producing ship operating days for that voyage.

(b)ALBD is a standard measure of passenger capacity for the period that we use to approximate rate and capacity variances, based on consistently applied formulas that we use to perform analyses to determine the main non-capacity driven factors that cause our cruise revenues and expenses to vary. ALBDs assume that each cabin we offer for sale accommodates two passengers and is computed by multiplying passenger capacity by revenue-producing ship operating days in the period.

(c)Occupancy, in accordance with cruise industry practice, is calculated using a numerator of PCDs and 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.

(d)Fuel consumption in metric tons per thousand ALBDs for 2021 is not meaningful.

Results of Operations

Consolidated
			Three Months Ended August 31,																								Nine Months Ended August 31,
(in millions)			2022						2021						Change									2022						2021						Change
Revenues
Passenger ticket			$	2,595					$	303					$	2,292											$	4,753					$	326					$	4,426
Onboard and other			1,711						243						1,468												3,577						295						3,282
			4,305						546						3,760												8,329						621						7,708
Operating Costs and Expenses
Commissions, transportation and other			565						79						486												1,141						116						1,025
Onboard and other			537						72						465												1,060						94						966
Payroll and related			563						375						188												1,601						834						767
Fuel			668						182						486												1,577						398						1,179
Food			259						52						208												586						80						506
Ship and other impairments			—						475						(475)												8						524						(517)
Other operating			787						381						406												2,118						786						1,332
			3,379						1,616						1,763												8,092						2,832						5,260
Selling and administrative			625						425						199												1,774						1,305						469
Depreciation and amortization			581						562						19												1,707						1,681						26
			4,585						2,603						1,982												11,573						5,817						5,756
Operating Income (Loss)			(279)						(2,057)						1,778												(3,244)						(5,196)						1,952
Nonoperating Income (Expense)
Interest income			24						3						22												34						10						24
Interest expense, net of capitalized interest			(422)						(418)						(5)												(1,161)						(1,253)						92
Gains (losses) on debt extinguishment, net			—						(376)						376												—						(372)						372
Other income (expense), net			(81)						(11)						(70)												(108)						(87)						(21)
			(479)						(802)						323												(1,235)						(1,702)						467
Income (Loss) Before Income Taxes			$	(759)					$	(2,859)					$	2,101											$	(4,478)					$	(6,898)					$	2,420

NAA
			Three Months Ended August 31,																								Nine Months Ended August 31,
(in millions)			2022						2021						Change									2022						2021						Change
Revenues
Passenger ticket			$	1,716					$	151					$	1,565											$	3,163					$	152					$	3,011
Onboard and other			1,164						121						1,044												2,509						139						2,370
			2,880						271						2,609												5,672						291						5,382
Operating Costs and Expenses			2,280						966						1,314												5,335						1,647						3,689
Selling and administrative			368						219						149												1,078						672						406
Depreciation and amortization			358						343						16												1,046						1,018						28
			3,007						1,528						1,479												7,460						3,337						4,123
Operating Income (Loss)			$	(126)					$	(1,257)					$	1,130											$	(1,787)					$	(3,046)					$	1,259

EA
			Three Months Ended August 31,																								Nine Months Ended August 31,
(in millions)			2022						2021						Change									2022						2021						Change
Revenues
Passenger ticket			$	972					$	164					$	808											$	1,804					$	186					$	1,619
Onboard and other			294						69						225												585						88						497
			1,266						232						1,034												2,389						274						2,115
Operating Costs and Expenses			983						610						374												2,529						1,106						1,423
Selling and administrative			173						139						34												524						378						146
Depreciation and amortization			172						180						(8)												531						550						(19)
			1,328						929						399												3,585						2,034						1,551
Operating Income (Loss)			$	(62)					$	(696)					$	634											$	(1,196)					$	(1,760)					$	564

We paused our guest cruise operations in March 2020. We began our resumption of guest cruise operations in 2021 and continued into 2022. As of August 31, 2022, 93% of our capacity was serving guests, compared to 35% as of August 31, 2021. Our NAA segment had 95% of its capacity serving guests as of August 31, 2022, compared to 31% as of August 31, 2021. Our EA segment had 92% of its capacity serving guests as of August 31, 2022, compared to 43% as of August 31, 2021. We expect eight of our nine brands will have their entire fleet serving guests by the end of the fourth quarter of 2022. Given Costa Cruises’ significant presence in Asia, particularly China, which remains closed to cruising, the brand continues to evaluate deployment options and fleet optimization alternatives beyond the previously announced transfers of Costa Luminosa to Carnival Cruise Line as well as Costa Venezia and Costa Firenze to the COSTA® by CARNIVAL® concept.

The effects of the COVID-19 global pandemic, inflation, higher fuel prices and higher interest rates are collectively having a material negative impact on all aspects of our business, including our results of operations, liquidity and financial position. The full extent of these impacts are uncertain.

Three Months Ended August 31, 2022 (“2022”) Compared to Three Months Ended August 31, 2021 (“2021”)

Revenues

Consolidated

Cruise passenger ticket revenues made up 60% of our total revenues in 2022 while onboard and other revenues made up 40%. Revenues in 2022 increased by $3.8 billion as compared to 2021 due to the resumption of guest cruise operations and the significant increase of ships in service. ALBDs increased to 21.0 million in 2022 as compared to 3.8 million in 2021. Occupancy in 2022 was 84% compared to 54% in 2021.

NAA Segment

Cruise passenger ticket revenues made up 60% of our NAA segment’s total revenues in 2022 while onboard and other cruise revenues made up 40%. NAA segment revenues in 2022 increased by $2.6 billion as compared to 2021 due to the resumption of guest cruise operations and the significant increase of ships in service. ALBDs increased to 12.6 million in 2022 as compared to 1.4 million in 2021. Occupancy in 2022 was 92% compared to 68% in 2021.

EA Segment

Cruise passenger ticket revenues made up 77% of our EA segment’s total revenues in 2022 while onboard and other cruise revenues made up 23%. EA segment revenues in 2022 increased by $1.0 billion as compared to 2021 due to the resumption of guest cruise operations and the significant increase of ships in service. ALBDs increased to 8.5 million in 2022 as compared to 2.4 million in 2021. Occupancy in 2022 was 73% compared to 47% in 2021.

Operating Costs and Expenses

Consolidated

Operating costs and expenses increased by $1.8 billion to $3.4 billion in 2022 from $1.6 billion in 2021. These increases were driven by our resumption of guest cruise operations and restart related expenses, including the cost of returning ships to guest cruise operations and returning crew members to our ships, the cost of maintaining enhanced health and safety protocols, inflation and supply chain disruptions. We anticipate that many of these costs and expenses will end in 2022.

Fuel costs increased by $486 million to $668 million in 2022 from $182 million in 2021. This increase was caused by higher fuel consumption of 357 thousand metric tons, due to the resumption of guest cruise operations, and an increase in fuel prices of $421 per metric ton consumed in 2022 compared to 2021.

There were no ship impairment charges recognized in 2022 and $475 million of ship impairment charges recognized in 2021.

Selling and administrative expenses increased by $199 million to $625 million in 2022 from $425 million in 2021. This increase was caused by higher administrative expenses and increased advertising and promotional spend incurred as part of our resumption of guest cruise operations.

The drivers in changes in costs and expenses for our NAA and EA segments are the same as those described for our consolidated results.

Nonoperating Income (Expense)

Gains (losses) on debt extinguishment, net decreased to $0 million in 2022 from $376 million in 2021.

Nine Months Ended August 31, 2022 (“2022”) Compared to Nine Months Ended August 31, 2021 (“2021”)

Revenues

Consolidated

Cruise passenger ticket revenues made up 57% of our total revenues in 2022 while onboard and other revenues made up 43%. Revenues in 2022 increased by $7.7 billion as compared to 2021 due to the resumption of guest cruise operations and the significant increase of ships in service. ALBDs increased to 51.0 million in 2022 as compared to 4.4 million in 2021. Occupancy in 2022 was 71% compared to 50% in 2021.

NAA Segment

Cruise passenger ticket revenues made up 56% of our NAA segment’s total revenues in 2022 while onboard and other cruise revenues made up 44%. NAA segment revenues in 2022 increased by $5.4 billion as compared to 2021 due to the resumption of guest cruise operations and the significant increase of ships in service. ALBDs increased to 31.4 million in 2022 as compared to 1.4 million in 2021. Occupancy in 2022 was 78% compared to 68% in 2021.

EA Segment

Cruise passenger ticket revenues made up 76% of our EA segment’s total revenues in 2022 while onboard and other cruise revenues made up 24%. EA segment revenues in 2022 increased by $2.1 billion as compared to 2021 due to the resumption of guest cruise operations and the significant increase of ships in service. ALBDs increased to 19.6 million in 2022 as compared to 3.0 million in 2021. Occupancy in 2022 was 60% compared to 43% in 2021.

Operating Costs and Expenses

Consolidated

Operating costs and expenses increased by $5.3 billion to $8.1 billion in 2022 from $2.8 billion in 2021. These increases were driven by our resumption of guest cruise operations and restart related expenses, including the cost of returning ships to guest cruise operations and returning crew members to our ships, higher number of dry-dock days, the cost of maintaining enhanced health and safety protocols, inflation and supply chain disruptions. We anticipate that many of these costs and expenses will end in 2022.

Fuel costs increased by $1.2 billion to $1.6 billion in 2022 from $0.4 billion in 2021. The increase was caused by higher fuel consumption of 1.0 million metric tons, due to the resumption of guest cruise operations, and an increase in fuel prices of $364 per metric ton consumed in 2022 compared to 2021.

We recognized a ship impairment charge of $8 million in 2022 and ship impairment charges of $524 million in 2021.

Selling and administrative expenses increased by $0.5 billion to $1.8 billion for 2022 from $1.3 billion in 2021. The increase was caused by higher administrative expenses and increased advertising and promotional spend incurred as part of our resumption of guest cruise operations.

The drivers in changes in costs and expenses for our NAA and EA segments are the same as those described for our consolidated results.

Nonoperating Income (Expense)

Interest expense, net of capitalized interest, decreased by $0.1 billion to $1.2 billion in 2022 from $1.3 billion in 2021. The decrease was caused by a lower average interest rate as a result of completed refinancing efforts and was partially offset by a higher average debt balance in 2022 compared to 2021.

Gains (losses) on debt extinguishment, net decreased to $0 million in 2022 from $372 million in 2021.

Liquidity, Financial Condition and Capital Resources

As of August 31, 2022, we had $7.4 billion of liquidity including cash and borrowings available under our Revolving Facility. During the remainder of 2022 and 2023 we expect to continue to address maturities well in advance and obtain relevant financial covenant amendments or waivers, as needed.

We had a working capital deficit of $4.5 billion as of August 31, 2022 compared to working capital deficit of $0.3 billion as of November 30, 2021. The increase in working capital deficit was caused by a decrease in cash and cash equivalents, a decrease in short-term investments, an increase in customer deposits and an increase in current portion of long-term debt. 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 are $4.5 billion and $3.1 billion of customer deposits as of August 31, 2022 and November 30, 2021, respectively. We have paid refunds of customer deposits with respect to a portion of cancelled cruises. The amount of any future cash refunds may depend on future cruise cancellations and guest rebookings. 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. In addition, we have a relatively low-level of accounts receivable and limited investment in inventories.

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 used $1.6 billion of net cash flows in operating activities during the nine months ended August 31, 2022, a decrease of $2.2 billion, compared to $3.7 billion of net cash flows used for the same period in 2021. This was due to a decrease in the net loss and an increase in cash inflows from customer deposits during the nine months ended August 31, 2022 compared to the same period in 2021 and other working capital changes.

Investing Activities

During the nine months ended August 31, 2022, net cash used in investing activities was $3.5 billion. This was driven by the following:

• Capital expenditures of $3.0 billion for our ongoing new shipbuilding program

• Capital expenditures of $776 million for ship improvements and replacements, information technology and buildings and improvements

• Proceeds from sale of ships and other of $55 million

• Purchases of short-term investments of $315 million

• Proceeds from maturity of short-term investments of $515 million

During the nine months ended August 31, 2021, net cash used in investing activities was $3.5 billion. This was driven by the following:

• Capital expenditures of $2.8 billion for our ongoing new shipbuilding program

• Capital expenditures of $332 million for ship improvements and replacements, information technology and buildings and improvements

• Proceeds from sale of ships and other of $351 million

• Purchases of short-term investments of $2.7 billion

• Proceeds from maturity of short-term investments of $2.0 billion

Financing Activities

During the nine months ended August 31, 2022, net cash provided by financing activities of $3.2 billion was caused by the following:

• Issuances of $3.3 billion of long-term debt

• Repayments of $1.1 billion of long-term debt

• Payments of $116 million related to debt issuance costs

• Net repayments of short-term borrowings of $114 million

• Net proceeds of $1.2 billion from the public offering of Carnival Corporation common stock

• Purchases of $82 million of Carnival plc ordinary shares and issuances of $89 million of Carnival Corporation common stock under our Stock Swap Program

During the nine months ended August 31, 2021, net cash provided by financing activities of $4.9 billion was caused by the following:

• Issuances of $7.9 billion of long-term debt, including net proceeds of $3.4 billion from the issuance of the 2027 Senior Unsecured Notes, net proceeds of $2.4 billion from the issuance of the 2028 Senior Secured Notes, and net proceeds of $2.1 billion borrowed under export credit facilities to fund ship deliveries

• Repayments of $3.5 billion of long-term debt, including $2.0 billion repurchase of the 2023 Senior Secured Notes

• Premium payments of $286 million related to the repurchase of the 2023 Senior Secured Notes

• Net proceeds of $1.0 billion from Carnival Corporation common stock

• Purchases of $94 million of Carnival plc ordinary shares and issuances of $105 million of Carnival Corporation common stock under our Stock Swap Program

• Payments of $233 million related to debt issuance costs

Funding Sources

As of August 31, 2022, we had $7.4 billion of liquidity including cash and borrowings available under our Revolving Facility. In addition, we had $2.9 billion of undrawn export credit facilities to fund ship deliveries planned through 2024. We plan to use future cash flows from operations to fund our cash requirements including capital expenditures not funded by our export credit facilities.

(in billions)						2022						2023						2024
Future export credit facilities at August 31, 2022						$	0.8					$	1.6					$	0.5

Our export credit facilities contain various financial covenants as described in Note 3 - “Debt”. At August 31, 2022, we were in compliance with the applicable covenants under our debt 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.

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.

Interest Rate Risks

The composition of our debt and interest rate swaps, was as follows:

			August 31, 2022
Fixed rate			47		%
EUR fixed rate			14		%
Floating rate			25		%
EUR floating rate			13		%
GBP floating rate			1		%

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, Chief Executive Officer and Chief Climate Officer and our Chief Financial Officer and Chief Accounting Officer have evaluated our disclosure controls and procedures and have concluded, as of August 31, 2022, that they are effective at a reasonable level of assurance, as described above.

B. Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the quarter ended August 31, 2022 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings**.**

The legal proceedings described in Note 4 – “Contingencies and Commitments” of our consolidated financial statements, including those described under “COVID-19 Actions” and “Other Regulatory or Governmental Inquiries and Investigations,” are incorporated in this “Legal Proceedings” section by reference. Additionally, SEC rules require disclosure of certain environmental matters when a governmental authority is a party to the proceedings and such proceedings involve potential monetary sanctions that we believe may exceed $1 million.

On June 20, 2022, Princess Cruises notified the Australian Maritime Safety Authorization (“AMSA”) and the flag state, Bermuda, regarding approximately six cubic meters of comminuted food waste (liquid biodigester effluent) inadvertently discharged by Coral Princess inside the Great Barrier Reef Marine Park. On June 23, 2022, the UK P&I Club N.V. provided a letter of undertaking for approximately $1.9 million (being the estimated maximum combined penalty). We believe the ultimate outcome will not have a material impact on our consolidated financial statements.

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.

Operating Risk Factors

*•*Events and conditions around the world, including war and other military actions, such as the current invasion of Ukraine, inflation, higher fuel prices, higher interest rates and other general concerns impacting the ability or desire of people to travel, have led, and may in the future lead, to a decline in demand for cruises, impacting our operating costs and profitability.

We have been, and may continue to be, impacted by the public’s concerns regarding the health, safety and security of travel, including government travel advisories and travel restrictions, political instability and civil unrest, terrorist attacks, war and military action, most recently the current invasion of Ukraine, and other general concerns. The current invasion of Ukraine and its resulting impacts, including supply chain disruptions, increased fuel prices and international sanctions and other measures that have been imposed, have adversely affected, and may continue to adversely affect, our business. These factors may also have the effect of heightening many other risks to our business, any of which could materially and adversely affect our business and results of operations. Additionally, we have been, and may continue to be, impacted by heightened regulations around customs and border control, travel bans to and from certain geographical areas, voluntary changes to our itineraries in light of geopolitical events, government policies increasing the difficulty of travel and limitations on issuing international travel visas. We have been and may continue to be impacted by inflation, higher fuel prices, higher interest rates and supply chain disruptions and may also be impacted by adverse changes in the perceived or actual economic climate, such as global or regional recessions, higher unemployment and underemployment rates and declines in income levels.

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

**A.**Stock Swap Program

We have a program that allows us to realize a net cash benefit when Carnival Corporation common stock is trading at a premium to the price of Carnival plc ordinary shares. Under the Stock Swap Program, we may elect to offer and sell shares of Carnival Corporation common stock at prevailing market prices in ordinary brokers’ transactions and repurchase an equivalent number of Carnival plc ordinary shares in the UK market.

Under the Stock Swap Program effective June 2021, the Board of Directors authorized the sale of up to $500 million shares of Carnival Corporation common stock in the U.S. market and the purchase of Carnival plc ordinary shares on at least an equivalent basis.

We may in the future implement a program to allow us to obtain a net cash benefit when Carnival plc ordinary shares are trading at a premium to the price of Carnival Corporation common stock.

Any sales of Carnival Corporation common stock and Carnival plc ordinary shares have been or will be registered under the Securities Act of 1933, as amended. During the three months ended August 31, 2022, there were no sales or repurchases under the Stock Swap Program. Since the beginning of the Stock Swap Program, first authorized in June 2021, we have sold 14.1 million shares of Carnival Corporation common stock and repurchased the same amount of Carnival plc ordinary shares, resulting in net proceeds of $27 million. As of August 31, 2022, the maximum number of Carnival plc Ordinary Shares that may yet be purchased under the Stock Swap Program was 4.2 million.

B. Repurchases

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

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 August 22, 2022, by and between Carnival Corporation, Carnival plc, the subsidiary guarantors party thereto and U.S. Bank Trust Company, National Association, as Trustee, relating to the 5.75% Convertible Senior Notes due 2024.						8-K						4.1						8/22/2022
10.2						Special Performance-Based Restricted Stock Unit Agreement for Josh Weinstein under the Carnival Corporation 2020 Stock Plan.																								X
Rule 13a-14(a)/15d-14(a) certifications
31.1						Certification of President, Chief Executive Officer and Chief Climate 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, Chief Executive Officer and Chief Climate 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

INDEX TO EXHIBITS
												Incorporated by Reference																		Filed/ Furnished Herewith
Exhibit Number						Exhibit Description						Form						Exhibit						Filing Date
32.1*						Certification of President, Chief Executive Officer and Chief Climate 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, Chief Executive Officer and Chief Climate 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
Interactive Data File
101						The consolidated financial statements from Carnival Corporation & plc’s joint Quarterly Report on Form 10-Q for the quarter ended August 31, 2022, as filed with the Securities and Exchange Commission on September 30, 2022, formatted in Inline XBRL, are as follows:
						(i) the Consolidated Statements of Income (Loss) for the three and nine months ended August 31, 2022 and 2021;																								X
						(ii) the Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended August 31, 2022 and 2021;																								X
						(iii) the Consolidated Balance Sheets at August 31, 2022 and November 30, 2021;																								X
						(iv) the Consolidated Statements of Cash Flows for the nine months ended August 31, 2022 and 2021;																								X
						(v) the Consolidated Statements of Shareholders’ Equity for the three and nine months ended August 31, 2022 and 2021;																								X
						(vi) the notes to the consolidated financial statements, tagged in summary and detail.																								X
104						The cover page from Carnival Corporation & plc’s joint Quarterly Report on Form 10-Q for the quarter ended August 31, 2022, as filed with the Securities and Exchange Commission on September 30, 2022, formatted in Inline XBRL (included as Exhibit 101).

*			These items are furnished and not filed.

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/ Josh Weinstein						By:			/s/ Josh Weinstein
			Josh Weinstein									Josh Weinstein
			President, Chief Executive Officer and Chief Climate Officer									President, Chief Executive Officer and Chief Climate Officer
By:			/s/ David Bernstein						By:			/s/ David Bernstein
			David Bernstein									David Bernstein
			Chief Financial Officer and Chief Accounting Officer									Chief Financial Officer and Chief Accounting Officer
			Date: September 30, 2022									Date: September 30, 2022