Carnival 10-Q 2023-08-31

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, 2023

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.
1.000% 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, 2023, Carnival Corporation had outstanding 1,119,445,229 shares of Common Stock, $0.01 par value.						At September 22, 2023, Carnival plc had outstanding 186,815,096 Ordinary Shares $1.66 par value, one Special Voting Share, GBP 1.00 par value and 1,119,445,229 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						33
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 5.			Other Information						35
Item 6.			Exhibits						36
SIGNATURES									38

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,
			2023						2022						2023						2022
Revenues
Passenger ticket			$	4,546					$	2,595					$	10,557					$	4,753
Onboard and other			2,308						1,711						5,640						3,577
			6,854						4,305						16,197						8,329
Operating Expenses
Commissions, transportation and other			823						565						2,097						1,141
Onboard and other			752						537						1,785						1,060
Payroll and related			585						563						1,768						1,601
Fuel			468						668						1,492						1,577
Food			364						259						1,000						586
Ship and other impairments			—						—						—						8
Other operating			928						787						2,546						2,118
Cruise and tour operating expenses			3,921						3,379						10,688						8,092
Selling and administrative			713						625						2,162						1,774
Depreciation and amortization			596						581						1,774						1,707
			5,230						4,585						14,624						11,573
Operating Income (Loss)			1,624						(279)						1,572						(3,244)
Nonoperating Income (Expense)
Interest income			59						24						183						34
Interest expense, net of capitalized interest			(518)						(422)						(1,600)						(1,161)
Debt extinguishment and modification costs			(81)						—						(112)						—
Other income (expense), net			(19)						(81)						(67)						(108)
			(559)						(479)						(1,595)						(1,235)
Income (Loss) Before Income Taxes			1,065						(759)						(23)						(4,478)
Income Tax Benefit (Expense), Net			9						(11)						(3)						(17)
Net Income (Loss)			$	1,074					$	(770)					$	(26)					$	(4,495)
Earnings Per Share
Basic			$	0.85					$	(0.65)					$	(0.02)					$	(3.89)
Diluted			$	0.79					$	(0.65)					$	(0.02)					$	(3.89)

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,
			2023						2022						2023						2022
Net Income (Loss)			$	1,074					$	(770)					$	(26)					$	(4,495)
Items Included in Other Comprehensive Income (Loss)
Change in foreign currency translation adjustment			(17)						(283)						82						(529)
Other			24						1						4						6
Other Comprehensive Income (Loss)			7						(282)						86						(523)
Total Comprehensive Income (Loss)			$	1,081					$	(1,052)					$	60					$	(5,018)

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, 2023						November 30, 2022
ASSETS
Current Assets
Cash and cash equivalents			$	2,842					$	4,029
Restricted cash			18						1,988
Trade and other receivables, net			485						395
Inventories			483						428
Prepaid expenses and other			855						652
Total current assets			4,683						7,492
Property and Equipment, Net			39,952						38,687
Operating Lease Right-of-Use Assets, Net			1,277						1,274
Goodwill			579						579
Other Intangibles			1,168						1,156
Other Assets			2,098						2,515
			$	49,756					$	51,703
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Short-term borrowings			$	—					$	200
Current portion of long-term debt			1,780						2,393
Current portion of operating lease liabilities			153						146
Accounts payable			1,103						1,050
Accrued liabilities and other			2,017						1,942
Customer deposits			5,955						4,874
Total current liabilities			11,008						10,605
Long-Term Debt			29,516						31,953
Long-Term Operating Lease Liabilities			1,180						1,189
Other Long-Term Liabilities			1,091						891
Contingencies and Commitments
Shareholders’ Equity
Carnival Corporation common stock, $0.01 par value; 1,960 shares authorized; 1,250 shares at 2023 and 1,244 shares at 2022 issued			12						12
Carnival plc ordinary shares, $1.66 par value; 217 shares at 2023 and 2022 issued			361						361
Additional paid-in capital			16,699						16,872
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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			•Adjusted net income (loss)
•Booking levels			•Adjusted EBITDA
•Occupancy			•Adjusted earnings per share
•Interest, tax and fuel expenses			•Adjusted free cash flow
•Currency exchange rates			•Net per diems
•Goodwill, ship and trademark fair values			•Net yields
•Liquidity and credit ratings			•Adjusted cruise costs per ALBD
•Investment grade leverage metrics			•Adjusted cruise costs excluding fuel per ALBD
•Estimates of ship depreciable lives and residual values			•Adjusted return on invested capital

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 our substantial debt balance as a result of the pause of our guest cruise operations. There may be additional risks that we consider immaterial or which are unknown. These factors include, but are not limited to, the following:

• Events and conditions around the world, including war and other military actions, such as the war in Ukraine, inflation, higher fuel prices, higher taxes, 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 as well as negative impacts to our operating costs and profitability.

• Pandemics have in the past and may in the future have a significant negative impact on our financial condition and operations.

• Incidents concerning our ships, guests or the cruise industry have in the past and may, in the future, negatively 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, labor and employment, 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 team members, our inability to recruit or retain qualified shoreside and shipboard team members 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 may be unable to deliver on their commitments, which could negatively 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 negatively impact 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.

• Failure to successfully implement our business strategy following our resumption of guest cruise operations would negatively impact the occupancy levels and pricing of our cruises and could have a material adverse effect on our business. We require a significant amount of cash to service our debt and sustain our operations. Our ability to generate cash depends on many factors, including those beyond our control, and we may not be able to generate cash required to service our debt and sustain our operations.

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- and climate-related statements may be based on standards and tools for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions and predictions that are subject to change in the future and may not be generally shared.

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. 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. Our results are also impacted by ships being taken out-of-service for planned maintenance, which we schedule during non-peak seasons. 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 cost of fuel and increases in other related costs are reasonably likely to continue to impact our profitability in both the short and long-term.

• We believe inflation and interest rates are reasonably likely to continue to impact our profitability.

• We believe a potential global minimum tax as well as any other changes in domestic and international tax rules and regulations could have a material impact on our effective tax rate.

• 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 have a material negative impact on our future financial results. The full impact of climate change to our business is not yet known.

Statistical Information

			Three Months Ended August 31,												Nine Months Ended August 31,
			2023						2022						2023						2022
Passenger Cruise Days (“PCDs”) (in millions) (a)			25.8						17.7						67.8						36.4
Available Lower Berth Days (“ALBDs”) (in millions) (b)			23.7						21.0						68.1						51.0
Occupancy percentage (c)			109		%				84		%				100		%				71		%
Passengers carried (in millions)			3.6						2.6						9.3						5.2
Fuel consumption in metric tons (in millions)			0.7						0.7						2.2						1.9
Fuel consumption in metric tons per thousand ALBDs			31.1						33.4						32.3						37.2
Fuel cost per metric ton consumed			$	636					$	958					$	681					$	836
Currencies (USD to 1)
AUD			$	0.66					$	0.70					$	0.67					$	0.71
CAD			$	0.75					$	0.78					$	0.74					$	0.78
EUR			$	1.09					$	1.03					$	1.08					$	1.08
GBP			$	1.27					$	1.21					$	1.24					$	1.28

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 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.

Results of Operations

Consolidated
			Three Months Ended August 31,																								Nine Months Ended August 31,
(in millions)			2023						2022						Change									2023						2022						Change
Revenues
Passenger ticket			$	4,546					$	2,595					$	1,951											$	10,557					$	4,753					$	5,804
Onboard and other			2,308						1,711						597												5,640						3,577						2,063
			6,854						4,305						2,548												16,197						8,329						7,868
Operating Costs and Expenses
Commissions, transportation and other			823						565						258												2,097						1,141						956
Onboard and other			752						537						215												1,785						1,060						725
Payroll and related			585						563						22												1,768						1,601						167
Fuel			468						668						(199)												1,492						1,577						(86)
Food			364						259						105												1,000						586						414
Ship and other impairments			—						—						—												—						8						(8)
Other operating			928						787						141												2,546						2,118						428
Cruise and tour operating expenses			3,921						3,379						542												10,688						8,092						2,596
Selling and administrative			713						625						89												2,162						1,774						388
Depreciation and amortization			596						581						15												1,774						1,707						67
			5,230						4,585						645												14,624						11,573						3,052
Operating Income (Loss)			1,624						(279)						1,903												1,572						(3,244)						4,816
Nonoperating Income (Expense)
Interest income			59						24						35												183						34						150
Interest expense, net of capitalized interest			(518)						(422)						(96)												(1,600)						(1,161)						(439)
Debt extinguishment and modification costs			(81)						—						(81)												(112)						—						(112)
Other income (expense), net			(19)						(81)						62												(67)						(108)						41
			(559)						(479)						(80)												(1,595)						(1,235)						(360)
Income (Loss) Before Income Taxes			$	1,065					$	(759)					$	1,823											$	(23)					$	(4,478)					$	4,456

NAA
			Three Months Ended August 31,																								Nine Months Ended August 31,
(in millions)			2023						2022						Change									2023						2022						Change
Revenues
Passenger ticket			$	2,963					$	1,716					$	1,247											$	6,896					$	3,163					$	3,733
Onboard and other			1,603						1,164						439												4,104						2,509						1,595
			4,566						2,880						1,686												11,000						5,672						5,328
Operating Costs and Expenses			2,661						2,280						381												7,132						5,335						1,797
Selling and administrative			420						368						52												1,295						1,078						217
Depreciation and amortization			377						358						19												1,115						1,046						69
			3,459						3,007						452												9,542						7,460						2,083
Operating Income (Loss)			$	1,107					$	(126)					$	1,233											$	1,458					$	(1,787)					$	3,245

Europe
			Three Months Ended August 31,																								Nine Months Ended August 31,
(in millions)			2023						2022						Change									2023						2022						Change
Revenues
Passenger ticket			$	1,595					$	972					$	623											$	3,699					$	1,804					$	1,895
Onboard and other			465						294						171												1,120						585						535
			2,060						1,266						794												4,819						2,389						2,430
Operating Costs and Expenses			1,124						983						141												3,303						2,529						774
Selling and administrative			199						173						26												634						524						110
Depreciation and amortization			168						172						(4)												506						531						(25)
			1,491						1,328						163												4,443						3,585						859
Operating Income (Loss)			$	569					$	(62)					$	631											$	376					$	(1,196)					$	1,572

As a result of the pause in our guest cruise operations, we have a substantial debt balance and require a significant amount of cash to service our debt. Our ability to generate cash will be affected by general macroeconomic, financial, geopolitical, competitive, regulatory and other factors beyond our control. The full extent of these impacts is uncertain and may be amplified by our substantial debt balance.

Three Months Ended August 31, 2023 (“2023”) Compared to Three Months Ended August 31, 2022 (“2022”)

Revenues

Consolidated

Cruise passenger ticket revenues made up 66% of our total revenues in 2023 while onboard and other revenues made up 34%. Revenues in 2023 increased by $2.5 billion to $6.9 billion from $4.3 billion in 2022 due to the increase of ships in service and considerably higher occupancy levels in 2023 as compared to 2022. Our full fleet was serving guests as of August 31, 2023, compared to 93% as of August 31, 2022. ALBDs increased to 23.7 million in 2023 as compared to 21.0 million in 2022. Occupancy for 2023 was 109% compared to 84% in 2022.

NAA Segment

Cruise passenger ticket revenues made up 65% of our NAA segment’s total revenues in 2023 while onboard and other cruise revenues made up 35%. NAA segment revenues in 2023 increased by $1.7 billion to $4.6 billion from $2.9 billion in 2022 due to the increase of ships in service and considerably higher occupancy levels in 2023 as compared to 2022. Our NAA segment’s full fleet was serving guests as of August 31, 2023, compared to 95% as of August 31, 2022. ALBDs increased to 14.6 million in 2023 as compared to 12.6 million in 2022. Occupancy for 2023 was 111% compared to 92% in 2022.

Europe Segment

Cruise passenger ticket revenues made up 77% of our Europe segment’s total revenues in 2023 while onboard and other cruise revenues made up 23%. Europe segment revenues in 2023 increased by $0.8 billion to $2.1 billion from $1.3 billion in 2022 due to the increase of ships in service and considerably higher occupancy levels in 2023 as compared to 2022. Our Europe segment’s full fleet was serving guests as of August 31, 2023, compared to 92% as of August 31, 2022. ALBDs increased to 9.1 million in 2023 as compared to 8.5 million in 2022. Occupancy for 2023 was 106% compared to 73% in 2022.

Operating Cost and Expenses

Consolidated

Operating costs and expenses increased by $0.5 billion to $3.9 billion in 2023 from $3.4 billion in 2022. These increases were driven by our resumption of guest cruise operations, an increase in ships in service and considerably higher occupancy.

Fuel costs decreased by $199 million to $468 million in 2023 from $668 million in 2022. $238 million of this decrease was caused by lower fuel prices and changes in fuel mix of $322 per metric ton consumed in 2023 compared to 2022, partially offset by higher fuel consumption due to the resumption of guest cruise operations.

Selling and administrative expenses increased by $89 million to $713 million in 2023 from $625 million in 2022. The increase was principally driven by increases in administrative expenses incurred as part of our resumption of guest cruise operations, which includes an increase in incentive compensation reflecting expected improvements in the company’s current and long-term performance.

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

Nonoperating Income (Expense)

Interest expense, net of capitalized interest, increased by $96 million to $518 million in 2023 from $422 million in 2022. The increase was caused by a higher average interest rate in 2023 compared to 2022.

Debt extinguishment and modification costs were $81 million in 2023 as a result of debt transactions during the quarter, where there were none in 2022.

Nine Months Ended August 31, 2023 (“2023”) Compared to Nine Months Ended August 31, 2022 (“2022”)

Revenues

Consolidated

Cruise passenger ticket revenues made up 65% of our total revenues in 2023 while onboard and other revenues made up 35%. Revenues in 2023 increased by $7.9 billion to $16.2 billion from $8.3 billion in 2022 due to the significant increase of ships in service and considerably higher occupancy levels in 2023 as compared to 2022. Our full fleet was serving guests as of August 31, 2023, compared to 93% as of August 31, 2022. ALBDs increased to 68.1 million in 2023 as compared to 51.0 million in 2022. Occupancy for 2023 was 100% compared to 71% in 2022.

NAA Segment

Cruise passenger ticket revenues made up 63% of our NAA segment’s total revenues in 2023 while onboard and other cruise revenues made up 37%. NAA segment revenues in 2023 increased by $5.3 billion to $11.0 billion from $5.7 billion in 2022 due to the significant increase of ships in service and considerably higher occupancy levels in 2023 as compared to 2022. Our NAA segment’s full fleet was serving guests as of August 31, 2023, compared to 95% as of August 31, 2022. ALBDs increased to 42.2 million in 2023 as compared to 31.4 million in 2022. Occupancy for 2023 was 104% compared to 78% in 2022.

Europe Segment

Cruise passenger ticket revenues made up 77% of our Europe segment’s total revenues in 2023 while onboard and other cruise revenues made up 23%. Europe segment revenues in 2023 increased by $2.4 billion to $4.8 billion from $2.4 billion in 2022 due to the significant increase of ships in service and considerably higher occupancy levels in 2023 as compared to 2022. Our Europe segment’s full fleet was serving guests as of August 31, 2023, compared to 92% as of August 31, 2022. ALBDs increased to 25.9 million in 2023 as compared to 19.6 million in 2022. Occupancy for 2023 was 93% compared to 60% in 2022.

Operating Cost and Expenses

Consolidated

Operating costs and expenses increased by $2.6 billion to $10.7 billion in 2023 from $8.1 billion in 2022. These increases were driven by our resumption of guest cruise operations, an increase in ships in service and considerably higher occupancy.

Selling and administrative expenses increased by $0.4 billion to $2.2 billion in 2023 from $1.8 billion in 2022. The increase was caused by increases in advertising costs and administrative expenses incurred as part of our resumption of guest cruise operations, which includes an increase in incentive compensation reflecting expected improvements in the company’s current and long-term performance.

The drivers in changes in costs and expenses for our NAA and Europe segments are the same as those described for our

consolidated results.

Nonoperating Income (Expense)

Interest expense, net of capitalized interest, increased by $0.4 billion to $1.6 billion in 2023 from $1.2 billion in 2022. The increase was caused by a higher average interest rate in 2023 compared to 2022.

Debt extinguishment and modification costs were $112 million in 2023 as a result of debt transactions during the period, where there were none in 2022.

Liquidity, Financial Condition and Capital Resources

As of August 31, 2023, we had $5.7 billion of liquidity including cash and cash equivalents and borrowings available under our Revolving Facility. We will continue to pursue various opportunities to refinance future debt maturities to reduce interest expense and/or to extend the maturity dates associated with our existing indebtedness and obtain relevant financial covenant amendments or waivers, if needed.

We had a working capital deficit of $6.3 billion as of August 31, 2023 compared to a working capital deficit of $3.1 billion as of November 30, 2022. The increase in working capital deficit was caused by a decrease in cash and cash equivalents and restricted cash and an increase in customer deposits, partially offset by an increase in prepaid expenses and a decrease in short-term borrowings as well as the 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 on our balance sheet until the sailing date. The cash generated from these advance receipts is used interchangeably with cash on hand from other sources, such as our borrowings and other cash from operations. The cash received as advanced receipts can be used to fund operating expenses, pay down our debt, make long-term investments or any other use of cash. Included within our working capital are $6.0 billion and $4.9 billion of customer deposits as of August 31, 2023 and November 30, 2022, respectively. 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,” of the consolidated financial statements for additional discussion regarding our liquidity.

Sources and Uses of Cash

Operating Activities

Our business provided $3.4 billion of net cash flows from operating activities during the nine months ended August 31, 2023, an increase of $4.9 billion, compared to $1.6 billion used for the same period in 2022. This was driven by a decrease in the net loss compared to the same period in 2022 and other working capital changes.

Investing Activities

During the nine months ended August 31, 2023, net cash used in investing activities was $2.3 billion. This was driven by:

• Capital expenditures of $1.6 billion for our ongoing new shipbuilding program

• Capital expenditures of $991 million for ship improvements and replacements, information technology and buildings and improvements

• Proceeds from sales of ships of $260 million

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

• 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

Financing Activities

During the nine months ended August 31, 2023, net cash used in financing activities of $4.2 billion was driven by:

• Repayments of $200 million of short term-borrowings

• Repayments of $6.8 billion of long-term debt

• Debt issuance costs of $116 million

• Debt extinguishment costs of $67 million

• Issuances of $3.0 billion of long-term debt

• Proceeds from issuance of $22 million of Carnival Corporation common stock and purchases of $20 million of Carnival plc ordinary shares under our Stock Swap Program

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

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

• Repayments of $1.1 billion of long-term debt

• Debt issuance costs of $116 million

• Issuances of $3.3 billion of long-term debt

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

• Proceeds from issuance of $89 million of Carnival Corporation common stock and purchases of $82 million of Carnival plc ordinary shares under our Stock Swap Program

Funding Sources

As of August 31, 2023, we had $5.7 billion of liquidity including $2.8 billion of cash and cash equivalents and $2.9 billion of borrowings available under our Revolving Facility, which matures in August 2024. In February 2023, Carnival Holdings II entered into the New Revolving Facility, which may be utilized beginning in August 2024, at which date it will replace our Revolving Facility. Refer to Note 3 - “Debt” of the consolidated financial statements for additional discussion. In addition, we had $3.0 billion of undrawn export credit facilities to fund ship deliveries planned through 2025. We plan to use existing liquidity and future cash flows from operations to fund our cash requirements including capital expenditures not funded by our export credit facilities. We seek to manage our credit risk exposures, including counterparty nonperformance associated with our cash and cash equivalents, and future financing facilities by conducting business with well-established financial institutions, and export credit agencies and diversifying our counterparties.

(in billions)						2023						2024						2025
Future export credit facilities at August 31, 2023						$	—					$	2.2					$	0.7

Our export credit facilities contain various financial covenants as described in Note 3 - “Debt”. At August 31, 2023, 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. There have been no material changes to our exposure to market risks since the date of our 2022 Form 10-K.

Interest Rate Risks

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

			August 31, 2023
Fixed rate			63		%
EUR fixed rate			17		%
Floating rate			5		%
EUR floating rate			15		%

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, 2023, that they are effective to provide 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, 2023 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 “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). On May 31, 2023, we received a summons from the Australia Federal Prosecution Service indicating that formal charges are being pursued against Princess Cruises and the Captain of the vessel. We believe the ultimate outcome will not have a material impact on our consolidated financial statements.

The risk factors in this Form 10-Q 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.

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

**A.**Stock Swap Program

Our Stock Swap Program 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 as of 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, 2023, 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 17.2 million shares of Carnival Corporation common stock and repurchased the same amount of Carnival plc ordinary shares, resulting in net proceeds of $29 million. No shares of Carnival Corporation common stock or Carnival plc ordinary shares were repurchased during the three months ended August 31, 2023 outside of the Stock Swap Program.

**C.**Trading Plans

During the quarter ended August 31, 2023, no director or Section 16 officer adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements (in each case, as defined in Item 408(a) of Regulation S-K).

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						Amendment No. 5, dated as of June 16, 2023, by and among Carnival Corporation and Carnival Finance, LLC, as borrowers, and JPMorgan Chase Bank, N.A., as administrative agent, to Term Loan Agreement, dated as of June 30, 2020.																								X
10.2						Term Loan Agreement, dated as of August 8, 2023, among Carnival Finance, LLC and Carnival Corporation, as borrowers, Carnival plc, the other guarantors party thereto, the various financial institutions as are or shall become parties thereto, JPMorgan Chase Bank, N.A., as administrative agent for the lenders, and U.S. Bank Trust Company, National Association, as security agent.																								X
10.3						Indenture, dated as of August 8, 2023, among Carnival Corporation, as issuer, Carnival plc, the guarantors party thereto and U.S. Bank Trust Company, National Association, as trustee, principal paying agent, transfer agent, registrar and security agent, relating to the 7.000% First-Priority Senior Secured Notes due 2029.																								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
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

INDEX TO EXHIBITS
												Incorporated by Reference																		Filed/ Furnished Herewith
Exhibit Number						Exhibit Description						Form						Exhibit						Filing Date
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, 2023, as filed with the Securities and Exchange Commission on September 29, 2023, formatted in Inline XBRL, are as follows:
						(i) the Consolidated Statements of Income (Loss) for the three and nine months ended August 31, 2023 and 2022;																								X
						(ii) the Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended August 31, 2023 and 2022;																								X
						(iii) the Consolidated Balance Sheets at August 31, 2023 and November 30, 2022;																								X
						(iv) the Consolidated Statements of Cash Flows for the nine months ended August 31, 2023 and 2022;																								X
						(v) the Consolidated Statements of Shareholders’ Equity for the three and nine months ended August 31, 2023 and 2022;																								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, 2023, as filed with the Securities and Exchange Commission on September 29, 2023, 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 29, 2023									Date: September 29, 2023