Carnival 10-Q 2025-05-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended May 31, 2025

OR

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)

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

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.

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 ☑

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CARNIVAL CORPORATION & PLC

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PART I - FINANCIAL INFORMATION

CARNIVAL CORPORATION & PLC

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(UNAUDITED)

(in millions, except per share data)

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

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CARNIVAL CORPORATION & PLC

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

(in millions)

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

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CARNIVAL CORPORATION & PLC

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in millions, except par values)

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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 statements concerning future results, operations, strategy, 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.

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. These factors include, but are not limited to, the following:

• Events and conditions around the world, including geopolitical uncertainty, war and other military actions, pandemics, inflation, higher fuel prices, higher interest rates and other general concerns impacting the ability or desire of people to travel could lead to a decline in demand for cruises as well as have significant negative impacts on our financial condition and operations.

• Incidents concerning our ships, guests or the cruise industry may 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-money laundering, anti-corruption, economic sanctions, trade protection, labor and employment, and tax may be costly and lead to litigation, enforcement actions, fines, penalties and reputational damage.

• Factors associated with climate change, including evolving and increasing regulations, increasing concerns about climate change and the shift in climate conscious consumerism and stakeholder scrutiny, and increasing frequency and/or severity of adverse weather conditions could have a material impact on our business.

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

• Cybersecurity incidents and data privacy breaches, 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 have adversely impacted and may in the future materially adversely impact our business operations, the satisfaction of our guests and crew and may lead to fines, penalties and 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 suppliers who are integral to the operations of our businesses. These suppliers 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.

• 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.

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

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The ordering of the risk factors set forth above is not intended to reflect our indication of priority or likelihood. Additionally, many of these risks and uncertainties are currently, and in the future may continue to be, amplified by our substantial debt balance incurred during the pause of our guest cruise operations. There may be additional risks that we consider immaterial or which are unknown.

Forward-looking statements should not be relied upon as a prediction of actual results. Subject to any continuing obligations under applicable law or any relevant stock exchange rules, we expressly disclaim any obligation to disseminate, after the date of this 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 “Item 7. 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 operating income is generated from May through September in conjunction with Alaska’s cruise season.

Known Trends and Uncertainties

• We believe the volatility in the cost of fuel is reasonably likely to impact our profitability in both the short and long-term.

• We believe the increasing focus on the reduction of greenhouse gas emissions and new and evolving related regulatory requirements, are reasonably likely to have a material negative impact on our future financial results. We became subject to the EU Emissions Trading System (“ETS”) on January 1, 2024, which includes a three-year phase-in period. The impact of this regulation in 2024 was $46 million, which represented costs associated with 40% of emissions under the ETS operational scope. In 2025, 70% of emissions under the ETS scope will be impacted, and in 2026, all in scope emissions will be impacted.

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Statistical Information

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)For the three months ended May 31, 2025 compared to the three months ended May 31, 2024, we had a 3.1% capacity increase in ALBDs comprised of a 0.3% capacity increase in our North America segment and an 8.4% capacity increase in our Europe segment.

Our North America segment’s capacity increase was caused by a Carnival Cruise Line 4,130-passenger capacity ship that transferred from Costa Cruises and entered into service in April 2024.

The increase in our North America segment’s capacity was partially offset by the following:

• Seabourn 460-passenger capacity ship that left the fleet in September 2024

• P&O Cruises (Australia) 2,000-passenger capacity ship that left the fleet in February 2025

Our Europe segment’s capacity increase was caused by the following:

• Cunard 2,960-passenger capacity ship that entered into service in May 2024

• The return to normal operations for ships impacted by the Red Sea rerouting in the prior year

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For the six months ended May 31, 2025 compared to the six months ended May 31, 2024, we had a 2.8% capacity increase in ALBDs comprised of a 2.9% capacity increase in our North America segment and a 2.6% capacity increase in our Europe segment.

Our North America segment’s capacity increase was caused by the following:

• Carnival Cruise Line 5,360-passenger capacity ship that entered into service in December 2023

• Princess Cruises 4,310-passenger capacity ship that entered into service in February 2024

• Carnival Cruise Line 4,130-passenger capacity ship that was transferred from Costa Cruises and entered into service in April 2024

Our North America segment’s capacity increase was partially offset by:

• Seabourn 460-passenger capacity ship that left the fleet in September 2024

• P&O Cruises (Australia) 2,000-passenger capacity ship that left the fleet in February 2025

Our Europe segment’s capacity increase was caused by:

• Cunard 2,960-passenger capacity ship that entered into service in May 2024

• The return to normal operations for ships impacted by the Red Sea rerouting in the prior year

The increase in our Europe segment’s capacity was partially offset by a Costa Cruises 4,240-passenger capacity ship that transferred to Carnival Cruise Line in February 2024

(d)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.

Three Months Ended May 31, 2025 (“2025”) Compared to Three Months Ended May 31, 2024 (“2024”)

Revenues

Consolidated

Passenger ticket revenues made up 65% of our 2025 total revenues. Passenger ticket revenues increased by $351 million, or 9.3%, to $4.1 billion in 2025 from $3.8 billion in 2024.

This increase was caused by:

• $169 million - higher ticket prices driven by continued strength in demand

• $115 million - 3.1% capacity increase in ALBDs

• $51 million - net favorable foreign currency translation impact

• $35 million - 0.9 percentage point increase in occupancy

The remaining 35% of 2025 total revenues was comprised of onboard and other revenues, which increased by $197 million, or 9.7%, to $2.2 billion in 2025 from $2.0 billion in 2024.

This increase was driven by:

• $128 million - higher onboard spending by our guests

• $37 million - 3.1% capacity increase in ALBDs

North America Segment

Passenger ticket revenues made up 61% of our North America segment’s 2025 total revenues. Passenger ticket revenues increased by $108 million, or 4.4%, to $2.6 billion in 2025 from $2.5 billion in 2024.

This increase was caused by:

• $102 million - higher ticket prices driven by continued strength in demand

• $23 million - 1.0 percentage point increase in occupancy

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The remaining 39% of our North America segment’s 2025 total revenues were comprised of onboard and other revenues, which increased by $122 million, or 8.1%, to $1.6 billion in 2025 from $1.5 billion in 2024. This increase was driven by $103 million of higher onboard spending by our guests.

Europe Segment

Passenger ticket revenues made up 76% of our Europe segment’s 2025 total revenues. Passenger ticket revenues increased by $234 million, or 18%, to $1.5 billion in 2025 from $1.3 billion in 2024.

This increase was driven by:

• $109 million - 8.4% capacity increase in ALBDs

• $67 million - higher ticket prices driven by continued strength in demand

• $52 million - net favorable foreign currency translation

The remaining 24% of our Europe segment’s 2025 total revenues were comprised of onboard and other revenues, which increased by $79 million, or 20%, to $474 million in 2025 from $395 million in 2024.

This increase was driven by:

• $33 million - 8.4% capacity increase in ALBDs

• $25 million - higher onboard spending by our guests

Operating Expenses

Consolidated

Operating expenses increased by $89 million, or 2.3%, to $3.9 billion in 2025 from $3.8 billion in 2024.

This increase was caused by:

• $101 million - 3.1% capacity increase in ALBDs

• $72 million - higher repair and maintenance expenses (including dry-dock expenses)

• $31 million - higher onboard and other cost of sales driven by higher onboard revenues

• $31 million - net unfavorable foreign currency translation

• $14 million - higher commissions, transportation costs, and other expenses driven by increased ticket pricing and an increase in the number of guests

These increases were partially offset by:

• $103 million - gains on the sales of one North America segment ship and one Europe segment ship

• $40 million - lower fuel prices including the impact of the European Union allowance cost (“EU allowances”)

• $32 million - lower fuel consumption per ALBD

Selling and administrative expenses increased by $26 million, or 3.3%, to $816 million in 2025 from $789 million in 2024.

Depreciation and amortization expenses increased by $59 million, or 9.2%, to $692 million in 2025 from $634 million in 2024.

North America Segment

Operating expenses were $2.6 billion in 2025 and 2024. The changes in operating expenses for the North America segment were not material.

Selling and administrative expenses increased by $8 million, or 1.8%, to $473 million in 2025 from $464 million in 2024.

Depreciation and amortization expenses increased by $35 million, or 8.5%, to $450 million in 2025 from $414 million in 2024.

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Europe Segment

Operating expenses increased by $73 million, or 6.5%, to $1.2 billion in 2025 from $1.1 billion in 2024.

This increase was caused by:

• $95 million - 8.4% capacity increase in ALBDs

• $31 million - net unfavorable foreign currency translation

These increases were partially offset by a $57 million gain on sale of one ship.

Selling and administrative expenses increased by $18 million, or 8.0%, to $248 million in 2025 from $230 million in 2024.

Depreciation and amortization expenses increased by $22 million, or 14%, to $187 million in 2025 from $164 million in 2024. This increase was driven by increases in capacity, fleet enhancements and net unfavorable foreign currency translation.

Operating Income

Our consolidated operating income increased by $374 million to $934 million in 2025 from $560 million in 2024. Our North America segment’s operating income increased by $167 million to $691 million in 2025 from $525 million in 2024, and our Europe segment’s operating income increased by $199 million to $368 million in 2025 from $168 million in 2024. These changes were primarily due to the reasons discussed above.

Nonoperating Income (Expense)

Interest expense, net of capitalized interest decreased by $109 million, or 24%, to $341 million in 2025 from $450 million in 2024. The decrease was substantially all due to a decrease in total debt, lower average interest rates and increased capitalized interest.

Debt extinguishment and modification costs decreased by $29 million to $4 million in 2025 from $33 million in 2024 as a result of debt transactions occurring during the respective periods.

Six Months Ended May 31, 2025 (“2025”) Compared to Six Months Ended May 31, 2024 (“2024”)

Revenues

Consolidated

Passenger ticket revenues made up 65% of our 2025 total revenues. Passenger ticket revenues increased by $566 million, or 7.7%, to $7.9 billion in 2025 from $7.4 billion in 2024.

This increase was caused by:

• $320 million - higher ticket prices driven by continued strength in demand

• $207 million - 2.8% capacity increase in ALBDs

• $68 million - 0.9 percentage point increase in occupancy

These increases were partially offset by a decrease of $29 million in air transportation revenue.

The remaining 35% of 2025 total revenues was comprised of onboard and other revenues, which increased by $386 million, or 10%, to $4.2 billion in 2025 from $3.8 billion in 2024.

This increase was driven by:

• $252 million - higher onboard spending by our guests

• $103 million - 2.8% capacity increase in ALBDs

• $29 million - 0.9 percentage point increase in occupancy

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North America Segment

Passenger ticket revenues made up 62% of our North America segment’s 2025 total revenues. Passenger ticket revenues increased by $268 million, or 5.6%, to $5.0 billion in 2025 from $4.7 billion in 2024.

This increase was caused by:

• $148 million - higher ticket prices driven by continued strength in demand

• $138 million - 2.9% capacity increase in ALBDs

• $30 million - 0.7 percentage point increase in occupancy

These increases were partially offset by a decrease of $31 million in air transportation revenue.

The remaining 38% of our North America segment’s 2025 total revenues were comprised of onboard and other revenues, which increased by $295 million, or 10%, to $3.1 billion in 2025 from $2.8 billion in 2024.

This increase was driven by:

• $199 million - higher onboard spending by our guests

• $82 million - 2.9% capacity increase in ALBDs

Europe Segment

Passenger ticket revenues made up 77% of our Europe segment’s 2025 total revenues. Passenger ticket revenues increased by $286 million, or 11%, to $3.0 billion in 2025 from $2.7 billion in 2024.

This increase was driven by:

• $173 million - higher ticket prices driven by continued strength in demand

• $69 million - 2.6% capacity increase in ALBDs

• $38 million - 1.4 percentage point increase in occupancy

The remaining 23% of our Europe segment’s 2025 total revenues were comprised of onboard and other revenues, which increased by $88 million, or 11%, to $887 million in 2025 from $799 million in 2024.

This increase was driven by:

• $52 million - higher onboard spending by our guests

• $21 million - 2.6% capacity increase in ALBDs

Operating Expenses

Consolidated

Operating expenses increased by $150 million, or 2.0%, to $7.7 billion in 2025 from $7.5 billion in 2024.

This increase was caused by:

• $206 million - 2.8% capacity increase in ALBDs

• $63 million - higher onboard and other cost of sales driven by higher onboard revenues

• $50 million - higher repair and maintenance expenses (including dry-dock expenses)

• $44 million - higher commissions, transportation costs, and other expenses driven by increased ticket pricing and an increase in the number of guests

These increases were partially offset by:

• $103 million - gains on the sales of one North America segment ship and one Europe segment ship

• $68 million - lower fuel prices including the impact of the cost of EU allowances

• $58 million - lower fuel consumption per ALBD

Selling and administrative expenses increased by $61 million, or 3.8%, to $1.7 billion in 2025 from $1.6 billion in 2024.

Depreciation and amortization expenses increased by $100 million, or 8.0%, to $1.3 billion in 2025 from $1.2 billion in 2024.

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North America Segment

Operating expenses increased by $54 million, or 1.1%, and were $5.0 billion in 2025 and 2024.

This increase was caused by:

• $145 million - 2.9% capacity increase in ALBDs

• $40 million - higher onboard and other cost of sales driven by higher onboard revenues

These increases were partially offset by:

• $56 million - lower fuel prices including the impact of the cost of EU allowances

• $46 million - gain on sale of one ship

• $42 million - lower fuel consumption per ALBD

Selling and administrative expenses increased by $27 million, or 2.8%, to $993 million in 2025 from $966 million in 2024.

Depreciation and amortization expenses increased by $71 million, or 8.7%, to $884 million in 2025 from $813 million in 2024.

Europe Segment

Operating expenses increased by $92 million, or 3.9%, to $2.5 billion in 2025 from $2.4 billion in 2024.

This increase was caused by:

• $62 million - 2.6% capacity increase in ALBDs

• $35 million - higher repair and maintenance expenses (including dry-dock expenses)

• $25 million - higher commissions, transportation costs, and other expenses driven by increased ticket pricing and an increase in the number of guests

• $23 million - higher onboard and other cost of sales driven by higher onboard revenues

These increases were partially offset by a $57 million gain on sale of one ship.

Selling and administrative expenses increased by $34 million, or 7.4%, to $499 million in 2025 from $464 million in 2024.

Depreciation and amortization expenses increased by $27 million, or 8.4%, to $356 million in 2025 from $328 million in 2024.

Operating Income

Our consolidated operating income increased by $641 million to $1.5 billion in 2025 from $0.8 billion in 2024. Our North America segment’s operating income increased by $410 million to $1.2 billion in 2025 from $0.8 billion in 2024, and our Europe segment’s operating income increased by $220 million to $508 million in 2025 from $288 million in 2024. These changes were primarily due to the reasons discussed above.

Nonoperating Income (Expense)

Interest expense, net of capitalized interest decreased by $203 million, or 22%, to $718 million in 2025 from $921 million in 2024. The decrease was substantially all due to a decrease in total debt, lower average interest rates and increased capitalized interest.

Debt extinguishment and modification costs increased by $190 million to $255 million in 2025 from $66 million in 2024 as a result of debt transactions occurring during the respective periods.

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Liquidity, Financial Condition and Capital Resources

As of May 31, 2025, we had $5.2 billion of liquidity including $2.1 billion of cash and cash equivalents and $3.0 billion of borrowings available under the Revolving Facility. In June 2025, Carnival Corporation and Carnival plc entered into a $4.5 billion New Revolving Facility, which replaced the Revolving Facility. The New Revolving Facility matures in June 2030 and contains an accordion feature, allowing for up to $1.0 billion of additional revolving commitments. In addition, we had $8.4 billion of undrawn export credit facilities to fund ship deliveries planned through 2033. We will continue to pursue various opportunities to repay portions of our existing indebtedness and refinance future debt maturities to extend maturity dates and reduce interest expense. Refer to Note 3 - “Debt” of the consolidated financial statements and Funding Sources below for additional details.

We had a working capital deficit of $8.6 billion as of May 31, 2025 compared to a working capital deficit of $8.2 billion as of November 30, 2024. The increase in working capital deficit was driven by an increase in customer deposits, partially offset by an increase in cash and cash equivalents as well as decreases in accrued liabilities and other and 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 $8.1 billion and $6.4 billion of current customer deposits as of May 31, 2025 and November 30, 2024. 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 capped reserve fund in cash. In addition, we have a relatively low level of accounts receivable and limited investment in inventories.

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.

Sources and Uses of Cash

Operating Activities

Our business provided $3.3 billion of net cash flows from operating activities during the six months ended May 31, 2025, a decrease of $0.5 billion, compared to $3.8 billion provided for the same period in 2024. This was caused by the nonrecurrence of cash provided by the release of $0.8 billion in credit card reserves in 2024 (included in the change in prepaid expenses and other assets).

Investing Activities

During the six months ended May 31, 2025, net cash used in investing activities was $1.2 billion. This was driven by:

• Capital expenditures of $1.5 billion primarily attributable to ship improvements and developments in our port destinations and exclusive islands

• Proceeds of $312 million substantially all from the sales of one North America segment ship and one Europe segment ship

During the six months ended May 31, 2024, net cash used in investing activities was $3.4 billion. This was caused by capital expenditures of $3.5 billion primarily attributable to the delivery of two North America segment ships and one Europe segment ship.

Financing Activities

During the six months ended May 31, 2025, net cash used in financing activities of $1.2 billion was caused by:

• Repayments of $5.1 billion of long-term debt

• Debt issuance costs of $41 million

• Debt extinguishment costs of $197 million

• Issuances of $4.1 billion of long-term debt

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During the six months ended May 31, 2024, net cash used in financing activities of $1.2 billion was caused by:

• Repayments of $4.1 billion of long-term debt

• Debt issuance costs of $117 million

• Debt extinguishment costs of $41 million

• Issuances of $3.0 billion of long-term debt

Funding Sources

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.

Our export credit facilities contain various financial covenants as described in Note 3 - “Debt”. At May 31, 2025, we were in compliance with the applicable covenants under our debt agreements.

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 “Item 7. 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 2024 Form 10-K.

Interest Rate Risks

The composition of our debt, after the effect of interest rate swaps, was as follows:

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 Chief Executive Officer and our Chief Financial Officer and Chief Accounting Officer have evaluated our disclosure controls and procedures and have concluded, as of May 31, 2025, 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 May 31, 2025 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings**.**

To the extent disclosure is required by Part II. Item 1 of Form 10-Q, the legal proceedings described in Note 4 – “Contingencies and Commitments” of our consolidated financial statements, including those described under “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 will exceed $1 million for such proceedings.

The risk factors that affect our business and financial results are discussed in “Item 1A. Risk Factors,” included in the Form 10-K, and there has been no material change to these risk factors since the Form 10-K filing. These risks should be carefully considered, and 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.

Trading Plans

During the quarter ended May 31, 2025, 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).

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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.